Padma Bank merger can take place once law passed: Kamal

Finance Minister AHM Mustafa Kamal on Wednesday said Padma Bank can go for merger with other banks after necessary changes to relevant laws are made.

The Finance Minister made the comment while replying to questions after chairing the day’s meetings on the Cabinet Committee on Economic Affairs and the Cabinet Committee on Government Purchase.

“Of course, the Finance Ministry can consider the merger proposal. But we have to amend relevant laws first. We will do it after the law is in place,” said Kamal.

The concerned law on bank mergers is being drafted and is in the final stage. “Once it is tabled in Jatiya Sangsad and passed, then the operations for bank merger will begin,” he said.

Kamal said he is yet to receive any proposal regarding the merger of Padma Bank. He noted that state-owned commercial banks like Sonali Bank Ltd, Janata Bank Ltd, Agrani Bank Ltd and Rupali Bank Ltd have shares in Padma Bank.

He said representatives of the state-owned commercial banks are also on the bank’s board.

He said initially, those associated with this bank could not run it properly and were involved in alleged corruption. “Following filing of cases, legal procedures are going on while the culprits are now in jail.”

Kamal said the government would have to look after the interest of the bank’s shareholders so that the bank is not shut down and its operations continue. “For this, the state-owned banks earlier came up to its rescue.”

Over Padma Bank’s bid to raise foreign funding, Kamal said anyone abiding by the law could raise foreign funds.

“If the foreign investors think it is viable to invest in the bank seeing its balance sheet, then anyone can invest,” he continued.

However, the Finance Minister said the Padma Bank needs to be compliant and it would have to follow the existing rules and regulations.

The bank, established in 2013, became a hotbed of financial irregularities in less than three years of operation. More than Tk 3,500 crore was siphoned out of the bank, according to the central bank.

Former chairman Muhiuddin Khan Alamgir and audit committee chairman Md Mahabubul Haque Chisty were forced to resign in November 2017 amid allegations galore. The government stepped in to rescue the bank the following year.

State-owned financial institution Investment Corporation of Bangladesh, Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank bought 60 per cent stake in the bank for Tk 715 crore.

Recently, the Padma Bank and USA-based investment bank Delmorgan signed a memorandum of understanding on a potential $700-million debt and equity capital.

The MoU may involve a change in the bank’s control, said a media release.