Four SoBs, ICB to buy shares of Farmers Bank

Four state-owned banks (SoBs) and the Investment Corporation of Bangladesh (ICB) are buying shares of Farmers Bank in a desperate effort to save the troubled bank hit by loan scams, reports bdnews24.com

.Bangladesh Bank cleared the way for the ICB and the four government banks -- Sonali, Janata, Agrani and Rupali -- relieving them of barriers under the Banking Companies Act.

The central bank issued a notice on Tuesday, citing an order from Governor Fazle Kabir.

A central bank official said the four state-owned banks and the ICB will buy Farmers Bank shares for Tk 7.15 billion.

The four banks will pay Tk 1.65 billion each and the ICB will account for Tk 550 million of the fund.

The money will be used to pay depositors of the troubled bank.

Its authorised capital is Tk 15 billion and paid-up capital Tk 4.01 billion. The bank is trying to increase its paid-up capital to Tk 15 billion.

According to a government report on Farmers Bank, it loosened rules of disbursing loans and its internal control system soon after it was established by ruling Awami League MP Muhiuddin Khan Alamgir in 2013.

The irregularities identified in the report included not following guidelines to disburse loans, giving loans to organisations that actually do not exist and to its directors and directors of other banks violating rules, giving loans against insufficient or faulty guarantees and giving a borrower more amount than the ceiling.