The reconstituted board of the scam-hit BASIC Bank has approved an ambitious action plan to shore up the battered state-controlled bank through significantly reducing its non-performing loan portfolio and making fresh lending to potential borrowers within this year.
The bank will recover classified loans of Tk 630 crore, out of Tk 4,560 crore swindled money of the bank, by December 2014 deadline, the board of directors in its last meeting held early this month decided.
By the deadline, the bank management has to trim down the classified loans from 40.58 per cent to 35 per cent as the once considered one of the best-run public sector banks seeks to reclaim its past glorious image, a director of the bank said.
The action plan envisages that at least Tk 1,000 crore will be lent out to new entrepreneurs and good borrowers within the set timeline, Tk 300 crore will be disbursed among small enterprises and Tk 50 crore as farm credit.
The deadline for the short-term action plan will end in December this year, while a long-term plan will be achieved by June 2016, a senior official of the bank said.
‘We are serious to achieve our target. I hope at least 80 per cent of the targets set in different areas including recovery and lending will be achieved,’ Mojibur Rahman, director, BASIC Bank, told New Age on Sunday.
He said reclaiming the glorious image the bank used to enjoy for a long time would be the major task to shore up the bank.
Other objectives of the action plan include increasing quality advances, bringing back old clients who have already left the bank, inviting new borrowers, stringent exercise of due diligence on all prospective loans, identifying bank staff involved in fraudulent and corrupt banking activities and increasing low-cost deposit money.
‘We are continuously monitoring the development and activities of the bank based on the action plan,’ Mojibur said, adding, ‘Reviving the bank’s goodwill is of paramount importance to make a financial sense.’
Other administrative and operational plans to be implemented by the deadline are excess space rented for branches to be reduced by surrendering or subletting, overall operating cost to be reduced by 5 per cent from total Tk 276 crore incurred last year, rationalisation of functional departments and divisions at the head office of the bank and deployment of excess employees to mobilise low cost deposits and prospective borrowers.
BASIC was reconstituted in July after its tainted board directors including the former chairman was sacked for their involvement in loan scams worth above Tk 4,000 crore.
The capital shortfall of the bank stood at Tk 1,676 crore as of June as non-performing loans hit a record level of Tk 4,560 crore during the period. The bank’s 34 branches out of its total 68 have been loss making.
The bank has recently sought Tk 1,372 crore from finance ministry to meet its capital deficit.
Finance ministry officials said they had been observing keenly the development of the bank under the new leadership and new board.
‘We will observe the development of BASIC till December as we want to see meaningful changes in its banking health based on their plan before injecting fresh funds as capital,’ a senior official at the finance ministry said.
-With New Age input
