Padma Bank sought Tk 3,500 crore bailout package from BB

Business Desk :

The crisis-hit Padma Bank has requested a Tk 3,500 crore bailout package from Bangladesh Bank (BB) to continue its operation however, the regulator intends to either merge or liquidate the struggling private lender, said officials familiar with the matter, the Department of Offsite Supervision (DOS).

The department is currently handling the merger procedures of five shariah-based banks — First Security Islami Bank, Social Islami Bank, Union Bank, Global Islami Bank, and EXIM Bank.

The Department of Offsite Supervision (DOS) of the BB has prepared the bank’s diagnostic review report, states that Padma Bank’s “condition is critical across all financial indicators, and it appears there is no prospect of improvement.” said a senior official of Bangladesh Bank, wishing not to be named.

According to the DOS report, Padma Bank’s capital is currently negative, with 92 percent of its loans classified as non-performing.

At the end of June 2025, the bank’s total loans stood at Tk 5,598 crore, of which Tk 5,131 crore were non-performing.

The private commercial lender’s interest income is also negative, and it is suffering from a liquidity shortfall, indicating a severe crisis across all financial soundness indicators, the DOS observed in the report.

The bank is now struggling to even pay salaries to its officials and employees.

Since August last year, the bank’s 850 employees have been receiving their salaries in their accounts, but they are not allowed to withdraw the full amount at once, states the report, adding that the money can be withdrawn in phases.

The total number of officials at the bank has come down to 653 as of June this year.

Kazi Md Talha, acting chief executive officer of Padma Bank, told the media that they are in a critical condition as the central bank has yet to make any decision about the bailout package.

“We need money to run our bank,” he said, adding that the BB is likely to merge the bank after completing the merger process of the five Shariah-based banks.

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.