BB seeks to revive Padma Bank, no liquidation decision: Spokesperson

Bangladesh Bank is seeking to revive and make financially troubled Padma Bank more vibrant rather than move towards its liquidation, the central bank’s spokesperson and Executive Director Arief Hossain Khan said on Monday.
“There has been no decision by Bangladesh Bank to close the bank. I am saying this in strong terms,” he told journalists at the central bank headquarters in response to a report claiming that Padma Bank was being shut down.
He said the central bank was discussing with the bank’s shareholders, including state-owned banks, ways to overcome its problems and turn it into a more dynamic lender.
“Discussions are taking place on how to make the bank more vibrant by overcoming its problems. Bangladesh Bank is working on this together with the shareholder state-owned banks,” Arief said.
He said the bank’s liquidity problems had been discussed, but no decision had been taken to hand it over for liquidation.
“We are discussing the liquidity problems. No decision has been made to send the bank for liquidation,” he said.
State-owned banks hold majority stake
Padma Bank, formerly Farmers Bank, has been facing prolonged financial difficulties. Bangladesh Bank has provided liquidity support to keep its operations running, with state-owned banks playing a key role in supporting the lender.
Sonali, Janata, Agrani and Rupali banks converted part of their deposits with Farmers Bank into investments in 2019 and acquired shares in the bank. The four state-owned banks collectively hold around 68% of Padma Bank’s shares.
To facilitate their involvement, provisions of the Bank Company Act relating to directors were relaxed, allowing the managing directors of the four state-owned banks to serve on Padma Bank’s board.
The state-owned bank MDs have since played a role in running Padma Bank. The state-owned Investment Corporation of Bangladesh (ICB) also acquired shares in the bank. At present, Sonali Bank Managing Director Shawkat Ali Khan is serving as chairman of Padma Bank.
Governor discusses revival options with board
Bangladesh Bank Governor Mostaqur Rahman held a meeting last Thursday with the managing directors of the four state-owned banks, who also serve on Padma Bank’s board.
The meeting discussed possible ways to strengthen Padma Bank and address its problems, according to central bank officials. They said liquidation was not discussed.
Arief said the focus was on exploring options to strengthen the bank.
“We sat with the MDs to discuss how the bank can be made more vibrant. There were discussions of this nature. If the bank is to be made vibrant, what can be done — these issues are being considered. Bangladesh Bank is working on this,” he said.
The clarification came a day after a newspaper published a report under the headline “Padma Bank is closing”, prompting concerns among depositors and stakeholders about the future of the troubled lender.
The central bank’s latest position indicates that, for now, the focus remains on rehabilitating and strengthening the bank rather than liquidating it.