Problem-ridden Padma Bank has applied to the Bangladesh Bank for Tk 1,300 crore in liquidity support to mitigate its crisis and strengthen its ability to repay depositors.

"We applied to the central bank for liquidity support last week but are yet to get any green signal," said Kazi Md Talha, chief executive officer (current charge) of Padma Bank.

The bank needs the fund to mitigate its current liquidity crisis, he added.

After getting the fund, the bank will be able to repay its individual and institutional depositors, according to officials of the bank.

The bank currently has a liability to repay deposits amounting to Tk 6,100 crore.

After getting the fund, the bank will be able to repay its individual and institutional depositors, said officials of the bank

A new chairman has also been appointed, so the bank will now identify more ways to repay depositors, Talha said.

Md Shawkat Ali Khan, CEO and managing director of Sonali Bank PLC, was appointed to concurrently serve as chairman of Padma Bank through a meeting of the board of directors on December 18.

Officials of the central bank said the Bangladesh Bank was yet to take any initiative to provide liquidity support to Padma Bank.

Padma Bank, which was established as Farmers Bank in 2013, became a hotbed for financial irregularities within just three years of its inception. More than Tk 3,500 crore was siphoned out of the bank in that period, according to the Bangladesh Bank.

Its ownership and management underwent a significant overhaul in 2017 after Muhiuddin Khan Alamgir, a former presidium member of the Awami League, stepped down as chairman.

To rescue Farmers Bank from financial distress, the government stepped in with a financial lifeline: state-owned Investment Corporation of Bangladesh, Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank bought a 60 percent stake in the bank for Tk 715 crore.

In January 2018, Chowdhury Nafeez Sarafat, chairman of RACE Asset Management, took charge as chairman of Padma Bank.

The bank was also rebranded as Padma Bank in 2019 to give it a clean slate. But the ghosts of Farmers Bank continued to haunt the institution.

The government had taken an initiative to merge the bank with EXIM Bank a few months after Chowdhury Nafeez Sarafat resigned from the bank in January of this year.

Industry insiders said the merger decision intensified the crisis at the bank as it prompted a frenzy of fund withdrawals by depositors.

Till September of this year, total outstanding loans of the bank stood at Tk 5,652.54 crore and of them Tk 4,855.98 crore or 85.91 percent had become defaulted, as per the central bank data.

Last month, the central bank injected Tk 22,500 crore as liquidity support into six crisis-hit banks -- First Security Islami Bank, Union Bank, Social Islami Bank, Global Islami bank, National Bank and Exim Bank.