REPORT ON BASIC BANK : Bank sunk from shady loans, unnecessary appointments under Hye [ Tritiyo Matra News ]

REPORT ON BASIC BANK : Bank sunk from shady loans, unnecessary appointments under Hye

Local July 12, 2015

Loan scams, appointment of manpower in excess of need, and uncontrolled expenditure are among half a dozen irregularities which have been identified as the cause behind the abysmal state of the state-owned BASIC Bank.
Besides, corruption in attracting savings accounts, purchase of space for office at a higher than market price, also took place frequently during the tenure of the previous board of directors, led by former chairman Sheikh Abdul Hye.
The Awami League government extended the tenure of Hye twice since September 2009, before asking the controversial chairman to step down in June 2014.
But by last December, the once profit-making BASIC had gone Tk 4,099 crore in the red from a profit of Tk 68.99 crore in 2009, while amount of bad loans soared to a staggering Tk 8,108 crore from only Tk 141 crore during the same period, because of disbursement of shady loans.
Seven hundred redundant staff members of the bank have no work but are getting a salary. The manpower of the bank rose to 2,237 from 776 in 2009 after wholesale appointment by the previous board. The annual expenditure of the bank rose to Tk 277 crore from mere Tk 71 crore.
Admitting to the facts, the banks and financial institution division secretary M Aslam Alam said the current BASIC Bank management was struggling to revive it.
BASIC’s function with overseas banks has almost stopped after it was blacked listed due to capital shortfall of Tk 3,609 crore after 2014. In 2009, it was only Tk 110 crore.
The glaring irregularities emerged from a document prepared by BASIC Bank managing director Khondokar Md. Iqbal for the banks and financial institutions division.
The document is based on a special audit report completed three months earlier that was carried out after the irregularities emerged one after another during the last two years.
Finance minister AMA Muhith was apprised of the findings of the report at a meeting held at the secretariat last week.
Muhith is reported to have said that a case will be filed against Hye although some of the ruling party policymakers were opposing the move.
Observers welcomed the government’s belated move to take legal action against Hye and other perpetuators.
But they observed that this could turn out to be an eye-wash to legitimise the injection of fresh funds into the bank from the public coffers.
The BASIC Bank management wanted Tk 2,000 crore to meet the capital shortfall and was assured by the banks and financial institutions division of the demands being met.
Former Bangladesh Bank governor Saleh Uddin said injection of fresh funds was inappropriate since no action was taken against the perpetuators of the loan scams.
He said the bank should be assisted in recovering the loans instead of injecting fresh funds.
The government has already given Tk 1,150 crore to the bank in two installments in the last one year. But the bank could not improve its performance, especially in recovering defaulted loans.
Centre for Policy Dialogue executive director Mustafizur Rahman said the injection of funds was not a good idea. He said a commission should be established immediately to review the ailing banking sector.