Around Tk 6,500 crore of 42 state-run companies remains stuck with the Padma Bank PLC, leaving these organisations in financial distress.
Bangladesh Bank officials confirmed that crisis-hit Padma Bank, formerly Farmers Bank, has been unable to return these deposits for years due to severe financial strain.
The central bank spokesperson and executive director, Husne Ara Shikha, confirming the amount and the number of affected government entities, said that the board of Padma Bank had become non-functional as the board members representing the government had left in September.
As a result, she said, no decision on critical issues can be taken until the formation of a new board of the bank.
Shikha said that the central bank, considering the current circumstances in Padma Bank, could not give any timeline when these companies would get back their funds.
She, however, said that the government was working on recovering the funds of the Bangladesh Climate Change Trust from Padma Bank and giving less attention to other public entities.
Among the affected funds, Tk 873.82 crore from the BCCT remains stuck with the Padma Bank PLC.
A committee with representatives from relevant government agencies was formed on November 7 to recover the amount, Shikha said.
The likelihood of recovering these funds remains slim in the near future, as Padma Bank is reportedly running low on capital for daily operations, officials at the central bank said.
In 2015, the BCCT opened a Fixed Deposit Receipt account, better known as FDR account, with Tk 536 crore in the then Farmers Bank. By February 2024, the amount owed had grown to Tk 873.82 crore due to discontinued interest payments since September 2023.
Other major state-owned companies with substantial deposits stuck with Padma Bank include the Titas Gas Transmission and Distribution Company (Tk 55 crore), the Bangladesh Telecommunication Regulatory Commission (Tk 25 crore), the Chittagong Port Authority (Tk 180 crore), and the Jiban Bima Corporation (Tk 127 crore).
At the end of 2023, a combined Tk 1,000 crore from state-owned banks, including Sonali, Agrani, Janata, Rupali, and the Investment Corporation of Bangladesh, also remains stuck with Padma Bank, Bangladesh Bank officials said.
Additional deposits from the Sadharan Bima Corporation, Bangladesh Power Development Board, Mongla Port Authority, Bangladesh Infrastructure Finance Fund Limited, Islamic Foundation, Narayanganj Dockyard and Engineering Works, and others are similarly inaccessible, with many of these entities reportedly receiving no interest on their deposits, they said.
Bangladesh Bank officials said that these organisations were also responsible to some extent for this situation as they, despite being aware of the bank鈥檚 prolonged financial troubles, continued to deposit their funds.
Since its inception in 2013, the bank, formed under political patronage, has been mired in allegations of misappropriations and defaults.
A Bangladesh Bank report revealed that, between 2013 and 2017, over Tk 3,500 crore was misappropriated from the bank, much of which remains in default.
About 62 per cent of the loans provided by the bank were defaulted. The bank is now unable to pay interest on deposits using its own income.
Following a public outcry, the then board chairman Muhiuddin Khan Alamgir and the then audit committee chairman Md Mahbubul Haque Chisti resigned in 2017 amid allegations of corruption.
To save the bank from a collapse, the government restructured its board and management in 2017 and Chowdhury Nafeez Sarafat became chairman of the bank鈥檚 board.
The government attempted to revive the bank in 2018 by letting Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, and the Investment Corporation of Bangladesh purchase 60 per cent of its shares with a Tk 715 crore investment.
These state-owned financial institutions, however, have yet to receive any dividends due to the bank鈥檚 continued financial losses, said the central bank officials.
Efforts to recover funds from defaulters have failed, creating capital shortfalls and an ongoing financial crisis, they said.
On January 31, 2024, Chowdhury Nafeez Sarafat resigned as the chairman of the board of Padma Bank, and in September, the Criminal Investigation Department began a money laundering investigation against him.
In August, the Anti-Corruption Commission began probing Sarafat over alleged embezzlement of Tk 800 crore from the bank and the country鈥檚 share market.
