Kamal goes tough on BASIC Bank
Finance Minister AHM Mustafa Kamal is finally cracking the whip on the wayward BASIC Bank, instructing shuttering of all branches that are in the red for three years in a row along with a host of other strict actions.
"The loss-making branches of the last two years will get time until the end of this year to turn around their situation. If they fail to, they will have to face closure," Kamal said yesterday in a discussion with the management and board of BASIC Bank.
In 2018, 18 out of the 68 branches of BASIC Bank were loss-making. The number increased to 33 in June this year.
Furthermore, errant officials of the troubled state-run bank who show negligence in their job will be let go and officials of intelligence agencies appointed to track down the habitual defaulters.
"The bank once had extraordinary momentum and overnight it went the other way."
The officials involved in the financial scams between 2009 and 2013 will be brought to book, he said.
During the period, Tk 4,500 crore was swindled out of the bank.
Multiple investigations found that the then Chairman Sheikh Abdul Hye Bacchu plundered the bank with the help of the board.
Last year, the bank incurred a net loss of Tk 353 crore. As of now, the bank's cumulative losses stand at Tk 3,006 crore.
As of June, default loans account for 59 percent of its total outstanding loans.
"There are 2,100 employees working in the bank's 72 branches and we do not know what they do," Kamal said.
According to a central bank probe report, the then management and board led by Bacchu recruited huge number of employees violating the rules and increased the number of branches to maintain them.
In 2007, the bank had 700 officials in 32 branches.
"Whether the bank continues or not is down to you. We will provide capital support for only so long."
The bank has to give a work plan on how to improve its financial health before taking on fresh funds from the government, he said.
According to the bank's management, some 380 defaulters who held default loans worth Tk 4,006 crore have so far asked the lender to reschedule their loans at two percent down payment.
"We will provide all sorts of cooperation to businesses that defaulted for genuine reasons. Fresh loans will be given to them if the previous loans are paid back. And we will take court order to offer the credit facility," he added.
As per a High Court order, businesses who enjoy the relaxed rescheduling facility will not be allowed to get fresh loans from banks.
"It has been five years now and the bank continues to face losses," said Md Mosharraf Hossain Bhuiyan, chairman of the National Board of Revenue.
The managing director will have to take punitive action against the inactive officials, he added.
Md Asadul Islam, senior secretary to financial institutions division of the finance ministry; Alauddin A Majid, chairman of the BASIC Bank board; and Md Rafiqul Alam, managing director of the lender, spoke at the event, among others.