BASIC Bank still suffers from scam after-effects

Despite various efforts, including wholesale management changes and rescheduling, default loans at scam-hit BASIC Bank rose in every quarter of 2014.

“The bank is still suffering from the after-effects of serious scams,” said a senior official of the finance ministry's banking division.

The new board, which took over in July last year, has taken various initiatives to bring down the default loans. “But it won't come down overnight -- it will be a long and painful process.”

In the last quarter, default loans crept up 3.83 percent, but the increment was way less than in the preceding three quarters, when it rose 99 percent, 79 percent and 34 percent successively.

On December 31, 2014, the state-run commercial bank had bad loans of Tk 6,384 crore, which was 53.48 percent of its total loan portfolio -- the highest in the banking sector in terms of proportion. Its operating loss for 2014 stood at Tk 50 crore.

Meanwhile, a BASIC board member said the new management has aggressively moved to realise the classified loans from the bank's top 100 defaulters, who account for 86 percent of the total bad loans, as well as restore consumer confidence in the bank.

They managed cash recovery of Tk 126 crore against the default loans and another Tk 9.51 crore from writing off bad loans.

Just three of BASIC's 68 branches -- Gulshan, Shantinagar and Dilkusha -- account for 80 percent of the classified loans and the recovery there remains woeful.

Gulshan branch had Tk 2,395 crore of default loans -- which is 73 percent of its total loan portfolio -- of which only Tk 26 crore was recovered last year.

Shantinagar branch's 64 percent of the loans were defaults; it managed to recover only Tk 8 crore of Tk 1,763 crore bad loans.

Dilkusha branch's defaults stood at Tk 905 crore, which is 60 percent of its total loans. It realised around Tk 41 crore.

However, after the new management took over, deposits, a pillar of the banking business, grew 6.41 percent.

Every official of its 68 branches has been given an individual target for deposit collection, said a senior official of BASIC Bank.

Historically a well-run bank, BASIC Bank's woes started when the Awami League government came to power in 2009 and appointed Sheikh Abdul Hye Bacchu as its chairman.

Under his influence, the bank indulged in all sorts of irregularities, which come to the fore in 2012 after a central bank investigation. Subsequently, the chief executive was removed and the board dissolved.