A file photo shows the headquarters of The Farmers Bank in Dhaka. Bangladesh Bank has asked Farmers Bank to remove its executive committee chairman Md Mahabubul Haque Chisty for his involvement in irregularities for disbursing Tk 50 crore loans.

Bangladesh Bank has asked the Farmers Bank Ltd to remove its executive committee chairman Md Mahabubul Haque Chisty for his involvement in irregularities for disbursing Tk 50 crore loans. The BB issued a letter to the Farmers Bank chairman Mohiuddin Khan Alamgir on May 17, asking him to remove Chisty from the EC within 10 days. The BB said Chisty would not be allowed to stay with the bank’s EC committee, but he would be able to continue his job as a director. The bank’s EC chairman Chisty was directly responsible for the anomalies as he, in some cases, passed loans without taking the approval of the EC committee, by-passed branch recommendations in some cases and in other cases did not take any recommendations in sanctioning the credits, according to the BB letter. The central bank has taken the initiative to remove Chisty from EC committee under Article 46 of Bank Company Act 1991. The central bank served a show-cause notice on March 8, 2015 asking Chisty to reply why any action would not be taken against him. Chisty replied the show-cause notice to the BB on March 26 this year confessing that he was responsible for the anomalies. But he violated the rules and regulations inadvertently in disbursing the loans. The BB investigation teams conducted separate inspections at the bank’s Gulshan and Motijheel branches in November 2014 when they unearthed the irregularities. The BB investigation found Chisty approved an overdraft loan facility of Tk 5 crore to Prime Islami Securities Ltd, a client of the bank’s Motijheel Branch, without placing the loan proposal of the branch before the executive committee meeting, violating banking rules. In another case, Chisty initially unilaterally approved a loan of Tk 2.50 crore to Saif Powertec Ltd without taking any recommendation from the Gulshan Branch after Saif Powertec applied to the branch for taking a loan of Tk 3 crore as working capital on July 3, 2014. The EC committee of the bank, led by Chisty, on the other hand, granted Tk 8 crore loan to United Bricks and Fultola Filling Station on March 5, 2014 without taking any credit proposal from the bank’s Gulshan Branch. The EC committee on March 5, 2014 approved a credit limit of Tk 15 crore to Urban Design and Development Ltd against an under-construction flat which was worth Tk 5.91 crore. The BB report said that the committee had not taken proper mortgage against the loan which cause a threat to the depositors’ money. The EC committee in its 14th meeting also approved a term-loan of Tk 16 crore and a working capital of Tk 2 crore in favour of Chittagong Fisheries, also a client of the Gulshan Branch, to purchase a fishing trawler. The EC committee approved the loan before preparing the credit proposal by the bank’s branch.