The Gulshan branch of BASIC Bank allowed fake and defaulter companies to swindle another Tk 1,000 crore in 2013, defying Bangladesh Bank's instructions to rectify its irregularities in disbursing around Tk 1,300 crore a year ago.
The state-run bank disbursed the amount without following any rules, found the central bank that ran an investigation at the branch for the second time between January and June this year.
“The possibility of getting back Tk 1,000 crore is bleak,” said the BB probe report.
Though private deposits at the branch didn't increase, it disbursed loans the same way it did previously depending mostly on fixed deposit receipts (FDR) by state enterprises, said the report.
The BB first conducted a probe at BASIC Bank's Gulshan branch in 2012, and found evidence of serious anomalies in approving and disbursing loans.
It found that borrowers withdrew the sanctioned amount soon after the approval, and there had been no transactions following the withdrawal. Most of the companies that took loans from the Gulshan branch were fake and existed only on paper.
Following the findings, the central bank several times asked the BASIC Bank board and management to check irregularities and take action.
But when the BB ran another probe at the bank branch this year, it found that the state-run bank not only defied its instructions, but also grossly violated the rules in approving and disbursing loans, said the latest BB report.
As of November 2013, the Gulshan branch disbursed loans of Tk 2,771 crore, which was Tk 415 crore till December 2010, meaning loan disbursement at the branch went up 567 percent in less than three years.
The branch made the disbursements though its deposits stood at only Tk 1,244 crore, most of which was deposited by government institutions as FDR.
Bangladesh Telecommunication Regulatory Commission had an FDR of Tk 682.50 crore, the Civil Aviation Authority Tk 55.53 crore, Dhaka Stock Exchange Tk 40.10 crore, Gas Transmission Company Tk 42.32 crore, Jamuna Oil Company Tk 38.56 crore and National Housing Authority Tk 31.52 crore.
The BASIC bank board approved and disbursed Tk 108 crore to Delta Systems, a company in default, despite the bank's Gulshan branch's objection to approving the loan.
Not only that, BASIC Bank kept on feeding the central bank false information about the company's loan classification.
Delta Systems first received Tk 50 crore in loans in 2012. Though the company showed it had goods worth Tk 65.32 crore, the BB found the goods were worth only Tk 2.50 to 3 crore.
The BB then directed BASIC Bank to classify the loan and take action against the bank officials responsible.
In response, the bank's then managing director informed the BB that the loan had been classified and action was taken against the officials involved.
But in its second investigation, the BB found that BASIC Bank didn't classify the loan. Moreover, the bank's board approved the company another Tk 30 crore loans in June 2013.
Surprisingly, Delta Systems withdrew Tk 58 crore, not 30 crore, from the Gulshan branch by December 2013, meaning Tk 28 crore was disbursed without any approval.
And there have been no transactions in the company's account after the withdrawal.
The client identified himself as an exporter, importer, indentor and computer supplier. But he never made any transactions with the branch or submit any documents and collateral, said the latest BB report.
The central bank also found that the BASIC Bank board approved loans of Tk 40 crore in favour of another borrower, West Coast Ship Building Industries, in May 2013 despite objections from the bank's Gulshan branch.
The branch had informed the board that the documents submitted by the firm were fake and fabricated.
It said the bank would be in trouble if it approved the proposal against the documents.
Even a letter to the firm from the bank branch bounced back, as the company didn't have any office at the location mentioned in the loan proposal.
But the board finally approved the proposal and the company withdrew the entire amount from the branch through pay orders within January this year.
The BB said the bank's branch resorted to tricks to hide the actual beneficiaries.
The central bank sent the latest report to the Anti-Corruption Commission on July 15.
The anti-graft body has engaged an officer to investigate the matter.