State-owned BASIC Bank has sought emergency fund worth Tk 1,372 crore from the government to bail itself out of the capital shortfall following massive loan scams. The reconstituted board of the beleaguered bank on Wednesday sent a letter to the banks and financial institutions division seeking the fund. Signed by the acting managing director Kanak Kumar Purkayastha the letter said that the capital shortfall of the bank soared to Tk 2,000 crore.
Earlier, the reconstituted board of the bank in its maiden meeting on July 14 decided to seek the fund from the finance ministry as the bank lacks adequate capital base to operate, a director of the bank said.
The bank had a capital shortfall of Tk 1,395 crore as of March, this year, which was Tk 3.34 crore in December 2012.
‘We will seek the recapitalisation fund. We are hopeful the finance ministry will act positively as the government is the owner of the bank,’ Alauddin A Majid, the newly appointed chairman of BASIC Bank board told New Age on Monday.
He said recouping defaulted loans, restoring the past reputation and stemming the drainage would be the major priorities of BASIC Bank.
BASIC Bank, once considered to be the best-run public sector bank, had a classified loan of Tk 4,157.50 crore as of June, this year, which is 36.55 per cent of its disbursed loans.
Insiders said the health of the bank started deteriorating soon after Abdul Hai Bachchu had been appointed chairman of the bank about four years back. The situation reached an alarming level after its defaulted loans stood at Tk 3,146 crore in June, 2013.
Hai resigned early this month amid widespread allegations that he sanctioned huge amount of bank loans to fake and little known borrowers.
The finance ministry dissolved the board of directors in the middle of the current month and appointed ‘clean individuals’ as directors of the bank as the last resort to shore up the bank.
The provision shortfall of BASIC Bank was Tk 658.72 crore as of March 2014, shows Bangladesh Bank data.
The first meeting of the reconstituted board of directors of the BASIC Bank entrusted its managing director and his team to formulate
an action plan giving emphasis on recovery of non-performing loans, sources said.
‘We will now work to regain the confidence of borrowers and depositors. We will have a series of meetings with potential borrowers to bring them back to the bank again,’ Majid told New Age.
The Bangladesh Bank earlier found different types of irregularities in the BASIC Bank in giving loans. These include non-verification of customers’ creditworthiness, absence of ‘know your customer (KYC)’ procedures, and extending loans to defaulters.
The central bank investigations detected financial irregularities involving around Tk 4,500 crore of loans in the bank’s three branches located at Gulshan, Dilkusha and Shantinagar in Dhaka between 2009 and 2013.
-With New Age input
