Shortfall now over Tk 34 billion
Rezaul Karim |
Updated: February 24, 2018
Scam-hit BASIC Bank has requested the government to make
available a fresh fund worth Tk 25 billion (Tk 2,500
crore) to meet its huge capital shortfall urgently, officials concerned said.
Managing Director of BASIC Bank Muhammad Awal Khan in a
letter to the Ministry of Finance on February 18 last made the request, they
added.
"We have sought an allocation of
Tk 25 billion from the government for BASIC Bank to reduce its
capital shortfall. The bank needs fresh injection of a huge amount of funds
urgently," a source in BASIC Bank Ltd told the FE on Tuesday.
"We have received the proposal
sent by the specialised bank, seeking funds to meet its capital
shortfall," a senior official of the banking division said.
When contacted, Mr Awal Khan said, "Some state-owned
banks (SoBs) have requested the government to provide funds. We have also
sought fund to meet capital shortage."
Data available until December last show that BASIC Bank
suffered capital inadequacy worth over Tk 34.10 billion (Tk 3,410
crore).
Officials of the banks said they immediately need
recapitalisation to strengthen their capital base, restore depositors'
confidence and maintain minimum capital requirement in line with Basel-III
guideline.
The government provided the bank with funds between fiscal
years (FYs) 2013-2014 and 2016-2017 to meet its capital
shortage.
In the past, the bank was given Tk 23.90
billion to meet its capital shortage. Tk 12 billion and Tk 10
billion were given to the bank in 2015 and 2017
respectively for capital replenishment.
In recent years, loans were sanctioned without following
rules properly which resulted in increased volume of classified loan, negative
shifting of the level of classified loan and erosion in the value of collateral
given against loans, according to a senior official of the bank.
This is why, he said, the provisioning requirement has
increased against classified loans.
In September 2009, Sheikh Abdul Hye Bachchu
was made chairman of BASIC Bank. The government appointed him on contractual
basis for three years. Later, his tenure was extended for two years in
September 2012.
After his appointment, the bank's performance started
deteriorating as Sheikh Bachchu and other directors of the board allegedly
indulged in "gross irregularities in sanctioning loans in violation of
rules and regulations of Bank Company Act", according to sources in BASIC
Bank.
The government dismissed the board of directors of the bank
in 2014.
Some Tk 35 billion in loans had allegedly been
illegally disbursed from Gulshan, Dilkusha and Shantinagar branches of the bank
between 2009 and 2011, the Bangladesh Bank's findings
showed.
Presently, the problem-ridden bank has taken a three-year
plan of action including various initiatives to reduce its huge amount of
default loans at a tolerable level.
rezamumu@gmail.com
Courtesy: The Financial Express Feb 24, 2018