Classified loans stand over 56% of the total loans and advances mostly provided to 67 clients

Default loans gripped the scam-hit BASIC bank as clients were allowed to take loans beyond the single borrower exposure limit to ultimately turn defaulters.

The bank so far provided a total loan of Tk10,731 crore to 81 clients (business groups and individuals), exceeding the limit of 15% of its capital, according documents Dhaka Tribune obtained.

Of the loans, Tk9,600 crore provided to 67 clients became classified till November last.

Of the default loans, Tk3,500 crore became bad debt, having hardly any hope to be recovered.

The loans, barring few ones, were given between the year 2011 and 2013 during the tenure of the bank’s chairman Sheikh Abdul Hai Bachchu, who has been removed amid criticisms.

BASIC Bank is going through serious financial crises as the default loans grew abnormally, eroding its financial strength.

More than half the total loans of the bank turned classified last year - rising to 56.22% in November last year from 11.72% in December 2013.   

The total loans of the bank stood at Tk11,407.57 crore in November last year, of which Tk6,473 crore became classified. Of the default amount, 67% or Tk4,356 crore turned into bad loan. 

The bank disbursed a new loan of Tk557 crore last year while the default loan rose by Tk5,191 crore.

The financial indicators of the bank deteriorated extensively in November due to abnormal growth of default loans which raised concern for Bangladesh Bank.

Bangladesh Bank has decided to hold a meeting soon over the financial situation of the bank with the board of directors.

According to the bank statement, the newly classified loan rose faster in the first four months of last year.

The amount of newly classified loan rose to Tk1,867 crore in April last year from Tk217 crore in December 2013. 

Then the growing trend slowed down due to regularising loans through taking advantage of the relaxed loan rescheduling policy. The amount of new classified loan was Tk501 crore in November last year. 

The capital shortfall of the bank stood at Tk2,257 crore in November last year from Tk647 crore in December 2013. 

Capital Adequacy Ratio (CAR), a percentage of a bank’s risk weighted credit exposures, came down to negative 24.14% in November last year against the required 10%.

Bangladesh Bank signed a MoU with the BASIC bank in August last year, setting a condition to reduce the default loan rate to 15% by June this year.