Mahabubul Haque

Mahabubul Haque Chisty, chairman of the Farmers Bank's executive committee, is at the centre of controversies surrounding the newly established bank.

Chisty violated rules and was involved in irregularities in approving loans, bypassing the executive committee and branch recommendations, according to a Bangladesh Bank probe.

The investigation was conducted at Farmers Bank's Gulshan and Motijheel branches in November 2014.

The central bank served a show-cause notice on Chisty on March 8 last year, asking him why action would not be taken against him.

In response to the notice on March 26, he claimed the violation of rules and regulations in loan disbursement was “unintentional”.

But the central bank was not satisfied with his response.

The BB sent a letter to Muhiuddin Khan Alamgir, chairman of the Farmers Bank's board of directors on May 17 last year, asking him to remove Chisty from the executive committee within 10 days.

A few days later, Chisty filed a writ petition with the High Court challenging the BB move. And the HC stayed the central bank order.

A bank's executive committee is a smaller body compared to its board of directors. The committee comprising two to seven board members is given authority on some business matters, including loan approval. But it is not a mandatory entity like audit or risk management committees, according to the central bank.

Chisty, known as Babul Chisty, has business dealings with Military Engineer Services, Border Guard Bangladesh, Gazipur Ordnance Factory and Chittagong Port, says the Farmers Bank's website.

He has set up a Jute Spinning Mill at Bakshiganj. He also owns Bonophul Tourist Complex at Bakshiganj in Jamalpur and Rashed Remi Filling Station, it adds.

BB FINDINGS

The BB investigation found that Chisty, in violation of banking rules, granted an overdraft loan facility of Tk 5 crore to Prime Islami Securities, a client at the bank's Motijheel branch, without placing the loan proposal at any meeting of the executive committee.

Chisty also unilaterally approved a loan of Tk 2.50 crore to Saif Powertec without any recommendations from the bank's Gulshan branch where the company applied for a loan of Tk 3 crore on July 3, 2014.

The executive body headed by Chisty granted a Tk 8-crore loan to United Bricks and Fultola Filling Station on March 5, 2014 without taking any credit proposal from the branch.

On the same day, it also approved a credit limit of Tk 15 crore to Urban Design and Development against an under-construction flat valued at Tk 5.91 crore.

According to the BB, the committee gave its approval to a term-loan of Tk 16 crore and a working capital of Tk 2 crore in favour of Chittagong Fisheries, a client at the bank's Gulshan branch, for purchase of a fishing trawler.

The loan was granted before the bank's branch prepared the credit proposal, said the BB.

Chisty approved a loan of Tk 20 crore to MS International though the bank's Gulshan branch recommended approval of a Tk 16-crore loan.

He also granted a Tk 12-crore loan to Emerald Foods, ignoring the observations of the bank's managing director and deputy managing director that the firm's collateral for the loan was insufficient.

Asked, Chisty said the central bank conducted “a half-hearted investigation” against the Farmers Bank. He also claimed he has enemies within the bank, who are conspiring against him.

He wants the BB to launch a fresh probe into the alleged irregularities at the Farmers Bank.

“I don't want any trouble with the central bank. I sought appointments with the governor and a deputy governor, but I didn't get it,” he told The Daily Star over the phone on Saturday.

Chisty said he would withdraw his case from the High Court if the BB agrees to reach an understanding with them.