BASIC Bank’s three branches didn’t follow any due process in giving out loans to big borrowers who later turned defaulters, said an audit report.
The report which was submitted to the parliamentary standing committee on public undertakings past week found 13 gross irregularities in lending process during last five years.
The irregularities even include giving loans to clients who had not filed any application in designated form and Know Your Client or KYC form.
M/S Aziz Halim Chowdhury, a chartered accountant firm, conducted functional audit of the state-run bank hit by large loan scams totalling Tk4,500 crore.
The irregularities took place in the bank’s Gulshan, Dilkusha and Shantinagar branches.
M Aslam Alam, Secretary to the Banking and Finance Division, said the new board of directors of BASIC Bank would be responsible for recovering Tk4,500 crore from defaulters.
The BASIC Bank gave loans amounting to over Tk456 crore and over Tk498 crore in 2009 and 2010 respectively.
The amount shot up to over Tk881 crore the next year and grew to Tk1,965 crore in 2012, according to the report.
In 2013, the bank made loans amounting to over Tk2,305 crore to 23 firms which is five time higher than the amount in five years ago.
The report said branches’ credit committees did not care about the consequence of lending to “unknown clients” which were later approved by the board of directors of BASIC Bank.
As the credit committees approved, the board of directors of BASIC Bank also endorsed the faulty credit proposals, it said.
The bank also accepted forged documents from third parties as collateral for approving big loans.
The authorities of the branches gave loans without examining the clients’ business experience and repayment capacity.
Officials didn’t visit the clients’ business centres before approval.
The updated CIB information from Bangladesh Bank was not taken in most cases, the report also mentioned.
BASIC Bank branches provided loans to unknown clients through open current accounts in the branches within short time without securitizing client loan proposals and in some cases branches provided loans just in a single day.
According to the report, the three branches also didn’t meet the conditions of loan approval letters.
No collateral deposits were also made in the branches for the loans violating the credit distribution policy of BASIC Bank.
In some cases, the head office and branches collected clients’ TIN certificates after giving loans.
Some clients purchased lands with the loans although the loans were taken for business. Later, the land was showed as collateral for further loans.
The report said the credit security form was not singed by the clients. The bank branches and in some cases the clients even filled in the forms with pencil.
Finance Minister Abul Maal Abdul Muhith recently told the Parliament that: “What is going on at BASIC Bank is robbery.”
BASIC Bank Chairman Sheikh Abdul Hye Bachchu, during whose time the irregularities happened, finally resigned on July 2 after fierce criticisms from different sections.
On July 6, the bank’s board of directors was dissolved and Alauddin was made new chairman.
News:Dhaka Tribune/14-June-2014