Padma Bank MD Tarek Reaz resigns citing personal reasons
Reaz resigned on 3 September from the post of MD of the private bank on personal grounds, a director of the bank confirmed to The Business Standard.
Tarek Reaz Khan, the managing director of Padma Bank (the erstwhile Farmers Bank), has resigned, citing personal reasons amid the bank's ongoing challenges over defaulted loans and deposit return issues.
A director of the bank revealed to The Business Standard that Tarek Reaz resigned from his position as MD of the private commercial bank on 3 September, citing "personal grounds". Subsequently, he formally notified the bank's chairman of his decision.
According to data from the central bank, as of the end of March 2023, Padma Bank has a total outstanding loan of Tk5,782 crore, out of which Tk3,427 crore constitutes defaulted loans, representing approximately 60% of their total debt. Additionally, the bank faces a capital deficit of Tk400 crore.
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An official from the Bangladesh Bank's relevant department told TBS, "We have received information regarding the MD of Padma Bank's resignation, although the bank itself has not yet informed us."
In February, the Investment Corporation of Bangladesh (ICB) made the decision to withdraw its investments from Padma Bank due to the absence of returns for a five-year period.
This move also frustrated the four state-owned commercial banks – Sonali Bank, Janata Bank, Agrani Bank, and Rupali Bank, as they have yet to see any returns on their substantial investments made nearly five years ago, according to the relevant sources of the banks.
Despite their substantial investments, the state-owned banks have not received any returns during this period. They have repeatedly contacted Padma Bank authorities through letters, requesting dividends on their equity investments or, at the very least, interest at the current deposit rate on their investment funds.
Tarek Reaz Khan, while he was MD of Padma Bank, explained, "Equity investors have not seen any returns because Padma Bank is still operating at a loss."
In 2018, the Investment Corporation of Bangladesh (ICB) and the state-owned banks collectively injected Tk715 crore into Padma Bank, which constituted 65% of the troubled bank's capital, as per the finance ministry's decision to save it from going bankrupt.
Furthermore, the state-owned banks made additional investments in Padma Bank through subordinate bonds and fixed deposits.
Unfortunately, even with this substantial influx of government investment, the bank's capital loss persisted as the defaulted loans remained unrecovered.
