Climate fund stuck in Farmers Bank

The Bangladesh Climate Change Trust was supposed to get back in 2016 the Tk 538 crore, plus the accumulated interest, it deposited with the then Farmers Bank. However, it has so far received just Tk 74 crore after around seven years.

The Trust's wait to recoup its investment will get even longer as, in December last year, Farmers Bank, now renamed Padma Bank, got eight more years from the Ministry of Environment, Forest and Climate Change to pay back the money.

A source present at the meeting in December told The Daily Star that the bank had sought 15 more years to return the deposit, but the environment minister asked Padma Bank officials to return the amount by 2030.

Environment Minister Md Shahab Uddin declined to comment on the deadline extension.

The Trust, which operates under the environment ministry, made the fixed deposit with Farmers Bank in 2015 for one year, meaning the bank was supposed to repay the money in 2016, Trust officials said. 

The money was deposited at the bank's Motijheel, Gulshan and Gulshan Avenue branches.

Including the 9 percent interest, the total due now stands at around Tk 827 crore, one official said.

The official, who is not authorised to speak to the media, said the bank has paid back Tk 74 crore over the last seven and a half years.

"They were supposed to give us the total fund along with interest one year after the deposit."

— Nurun Naher Hena, former MD of the Trust

Apart from seeking to delay the payment by more than 20 years, the embattled bank wants to pay the amount at 6 percent interest, and not at 9 percent as originally agreed by both Farmers Bank and the Trust, officials said.

Nurun Naher Hena, former managing director of the Trust, said the bank was supposed to give them a repayment plan as per the meetings held with them in December last year. But they were yet to submit the plan.

"They were supposed to give us the total fund along with interest one year after the deposit," said Naher, now the director general of the National Institute of Mass Communication.

Md Joynal Abedin, the incumbent managing director of the Trust, said the bank will inform them about their repayment plan after their board meeting.

"Once we are informed about their decision, our ministry will hold a meeting about the next course of action," he said.

Faisal Ahsan, acting managing director of the bank, said they held the board meeting in July, but the payout plan was not on the agenda.

"We stick to our commitment that if the bank performs well, we will start paying back the dues," he said.

Tarek Reaz Khan, who resigned as Padma Bank managing director on August 3, told The Daily Star earlier this year, "We sought 15 years to pay back the due. Recently, we paid Tk 5 crore. The payment will grow in line with the bank's financial improvement."

He said "a rumour-driven crisis" hit the bank recently, causing a fall of its deposits by Tk 187 crore in the 2022-23 fiscal year compared to the previous year.

In a special inspection in 2015, Bangladesh Bank found gross violation of banking rules in disbursing loans by the Farmers Bank management. The central bank also found involvement of its former directors in sanctioning the loans. After the news hit headlines, people rushed to withdraw their deposits, crippling the bank's ability to conduct its daily operations.

Ehsan Khasru, who was the managing director of the bank in 2016, did not return our requests for comments via phone and WhatsApp messages.

The sum was transferred to the bank when Kamal Uddin was environment secretary.

Contacted, Kamal, who is now heading the National Human Rights Commission, said they deposited the money with Farmers Bank as the bank offered the highest interest rate at the time.

"During my stint, I was happy receiving high interest which enabled the Trust to take up a number of projects. If we had declined the offer for highest interest, there would have been criticisms against us. The problem began after I left the ministry [in December 2016]," he said.

Preferring anonymity, Trust officials said that since 2018, they sent 14 letters and held several meetings with the bank to know the fate of their investment, but in reply they got nothing but mere assurances.

As per the Climate Change Trust Act-2010, the Trust can deposit 34 percent of its fund to various banks to earn interest so that it can fund projects aimed at creating resilience against climate change impact.

Since its inception in 2010, the Trust has received Tk 3,818 crore in government allocation till 2022, documents show.

Dr Iftekharuzzaman, executive director of Transparency International Bangladesh, said a proper investigation has long been overdue to explore on which ground and for whose benefit the climate fund money was invested in Farmers Bank.

"That the issue was a severe headache for not only the BCCT but also its parent ministry was amply evident when it was even discussed in parliament way back in 2018, though neither the fund nor the relevant ministries took any measures since to hold to account those responsible for this highly controversial investment when alternative credible options were not unavoidable," he said.

"The fund and government have allowed themselves to be hostage to the scam-ridden bank and practically encouraged it to come up with this untrustworthy request for unprecedentedly long-term grace, which is most likely to turn out to be a blatant design to close the matter by misappropriating the taxpayers' money," he added.