Out of all state-run banks in the country, BASIC Bank was in its worst financial condition as the central bank categorised 60 percent of its loans as defaulted.
According to the latest Bangladesh Bank report, defaulted loans in the banking sector has amounted to over Tk 1.12 trillion with six-state run banks accounting for Tk 530 billion or 31.58 percent.
An estimated 60.5 of all loans given out by BASIC Bank has been identified as defaulted loans with 57 to 73 percent of them having been marked as bad debts.
As of June this year, the bank’s loans amounted to over Tk 150 billion with default loans comprising over Tk 90 billion. Over Tk 80 billion of the default loans possibly cannot be ever recovered as they had been written off as bad debt.
The central bank says that the bank not only has a huge burden of default loans but also suffers from a provision crisis worth over Tk 30 billion.
Blaming one of the bank chiefs for the current state, former deputy governor of Bangladesh Bank Khondokar Ibrahim Khaled equally holds the BASIC Bank staffers responsible for bringing it down.
On the other hand, the new Managing Director of BASIC Bank Rafiqul Alam has taken a few measures to reduce its defaulted loans.
The new MD said that they were trying to bring down the amount of Non-Performing Loans at the bank from 60 percent to 20 percent within the next six months.
The bank plans to turn 10 of its thirty-three unprofitable sections into profitable one within six months while it was making efforts to identify those who had been involved in various irregularities at the bank between 2009 and 2014.
During a recent visit to BASIC Bank, Finance Minister AHM Mustafa Kamal gave directives to its higher official to reduce the number of its defaulted loans to prevent the bank from going bankrupt.
Prior to 2009, BASIC Bank was a model bank with soaring profits and the highest remunerations offered to its employees. Today the bank is barely making ends meet.
In 2009, the government appointed Sheikh Abdul Hye as chairman and Kazi Fakhrul Islam as managing director.
According to a central bank report, about Tk 50 billion was swindled out of BASIC Bank through loan frauds during the four-year tenure – 2009 to 2013 – of Sheikh Abdul Hye, the then chairman.
The central bank served a show cause notice to the then MD Kazi Fakhrul Islam in March of 2014 and issued a letter to the finance ministry to dissolve Basic Bank’s board of directors in April that year. Chairman Sheikh Abdul Hye resigned from his post soon afterwards.
Bangladesh Bank sent its report on Jul 14, 2014 to the Anti‑Corruption Commission (ACC) about the details of the embezzlement and found Abdul Hye’s illegal influence in all the illegal activities.