BASIC Bank slapped with Tk 10cr fine

Bangladesh Bank has slapped BASIC Bank with a Tk 10 crore fine for failing to control its loan growth within the mutually agreed ceiling.
BASIC Bank was supposed to keep its year-on-year loan growth at the end of December 2014 to 20 percent, as per an agreement signed with the central bank last July in a bid to arrest its spiralling loan growth caused by financial indiscipline.
The state-owned lender's loan growth overshot to 25.62 percent, which prompted the central bank last week to enforce the penalty stated in the agreement.
“The bank has been violating banking norms in many cases. We had no other option but to impose the fine,” said a central bank official asking not to be named.
He said the scheduled bank also failed to make up its capital deficit and bring down the non-performing loans.

BASIC Bank, however, has contested the central bank decision and appealed for withdrawal of the fine.
Subsequently, BB yesterday held a meeting, which was also attended by BASIC Bank officials, where it was decided that a departmental committee would be formed to review the appeal.
On the basis of the committee's recommendation, BB would take its decision on whether to make the fine effective or not, said the official.
BB in its routine investigations in 2012 linked BASIC Bank's abnormal credit growth, which ran as high as 40 percent at one point, to rampant financial irregularities, with many instances found where the bank's board of directors and top management gave out loans against false documents and inadequate collateral.