BASIC reels under bad debt

State-owned BASIC Bank, under fire over financial irregularities, has an unrecoverable debt that has soared nearly 30 times over the past four and a half years.

It currently has a capital deficit of over Tk 6.58 billion.

Information provided by the finance ministry at the meeting of a parliamentary standing committee on government institutions on Thursday showed the specialised bank had a Tk 1.41 billion bad debt at the end of 2009.

The amount swelled to Tk 41.57 billion by June this year.

In 2009, the bank loaned out Tk 4.56 billion of its total capital to nine institutions, of which 4.83 percent turned out to be bad loans. At present the percentage stands at 36.55.

The amount of disbursed loan went up consistently after 2009.

Eight institutions were given Tk 4.98 billion in loan in 2010, while Tk 8.81 billion was given to 12 institutions as loan in 2011.

Tk 19.65 billion was loaned to 23 institutions in 2012 and last year, 20 institutions got Tk 23.05 billion in loans from the bank.

The committee has held the bank's board responsible for the irregularities and recommended legal actions.

After Thursday's meeting, committee chief Shawkat Ali said preliminary investigation showed that the board members and officials were partners in crime as far as the financial irregularities were concerned.

We are waiting to see what the new board of directors do, Ali said.

"If their steps are not proper, then this committee will investigate the matter and make necessary recommendations," he said.

BASIC Bank's managing director was removed last May amid loan irregularities while its chairman stepped down last week.

A new chairman was appointed two days later and the board was revamped.

Ali said only removing those involved was not enough. "They must be punished," he said.

So far, the committee has not found any link between the apex Bangladesh Bank and the irregularities at the Basic Bank.

The finance ministry said it found irregularities over loan disbursement at the bank's main branch and other branches at Gulshan, Karwanbazar, Shantinagar and Dilkusha.

While approving loans in several cases, the bank overlooked rules and accepted fake documents from third parties as mortgage.

The ministry claimed to have obtained information about loan proposals that had been cleared without visiting the businesses, not collecting CIB reports of many customers, hastily opening running accounts to approve loan proposals within a short time and approving loans without necessary deposit.

It has asked the new BASIC chairman to investigate the irregularities and file a report within a month.

Those involved will be prosecuted by the Anti-Corruption Commission, the ministry said.

The parliamentary committee has recommended investigating the bank's financial irregularities and an elaborate report on it.

Committee member Subid Ali Bhuiyan said changing the board alone would not help.

"Exemplary punishment has to be handed down so that such irregularities do not take place in future."