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AM JAHID and REJAUL KARIM BYRON
The interim government is going to formulate a specific roadmap to recover funds of the Bangladesh Climate Change Trust (BCCT), amounting to Tk 873.82 crore, that have been held up in Padma Bank since 2016.
To formulate the roadmap, high-level representatives of different ministries and departments, including the Finance Division, Financial Institutions Division, and Ministry of Environment, Forest and Climate Change, are scheduled to hold a meeting with Padma Bank officials at the Bangladesh Bank today.
According to finance ministry sources, apart from the BCCT’s funds, the meeting will also determine plans to recover other government funds stuck at ailing Padma Bank, which had its board of directors reconstituted after the political changeover on August 5.
In 2015, the BCCT, which operates under the environment ministry, created a Fixed Deposit Receipt (FDR) account of Tk 536 crore, then known as Farmers Bank, for a period of one year.
The money was deposited at the bank’s Motijheel, Gulshan and Gulshan Avenue branches.
Upon maturity, the FDR was renewed until 2018 as Padma Bank had managed to return only Tk 74 crore in several phases.
In September 2023, an official of the BCCT said that the bank had not made any further payments.
The principal and interest climbed to Tk 597.62 crore at the end of the 2018-19 fiscal year.
By February this year, the amount owed to the trust had ballooned Tk 873.82 crore.
The wait to retrieve the investment got longer as Padma Bank was given eight more years by the Ministry of Environment to repay the money in December 2022.
Despite this, on December 31, 2023, BCCT officials sent a letter to the Bangladesh Bank governor and secretary of the Financial Institutions Division seeking their advice on potential legal action.
But no visible measures were taken to this end at that time, BCCT officials added.
On January 21 this year, Padma Bank converted Tk 760.09 crore of the funds into preference shares of the bank with an 8-year tenure at an interest rate of 6 percent without seeking the consent of the BCCT, according to officials of the trust.
Only three years after its establishment in 2013, Padma Bank became mired in a liquidity crisis due to significant irregularities.
Yet, due to political interference and the lure of high interest rates, government agencies such as the BCCT continued to invest significantly in the bank.
During a special investigation in 2015, the central bank uncovered significant violations of banking rules by the bank’s management in its loan disbursement process.
The central bank found the involvement of the bank’s former directors in sanctioning loans.