The central bank has spared state-owned BASIC Bank of obligations to maintain provisions against its Tk 45 billion default loans, reports bdnews24.com.

According to BASIC Bank financial report-2014, the Bangladesh Bank had given it the 'special waiver'.

The report said the central bank had given BASIC the opportunity to keep Tk 19.33 billion in block account without keeping any provision for next 10 years.

 It said another Tk 23.64 billion and Tk 1.37 billion could be kept in two other accounts without maintaining provision for five years.

Keeping provision for default loans is mandatory for banks. The central bank fixed the rates of provision based on the type of the default loans.

Banks have to maintain 100 per cent provision for bad loss.

Bangladesh Bank officials said they offered the waiver to help the Basic bank, which is facing allegations of widespread corruption and irregularities, to recover from its present state.

Central Bank Deputy Governor SK Sur Chowdhury told the news agency: "The waiver to BASIC Bank on provision has been given within the law."

How would the bank recover from its present condition without the waiver, he questioned.

Experts in the banking sector said the Tk 45 billion loans would be excluded from the bank's credit figure following the central bank decision.

They called the waiver unprecedented in the banking history of Bangladesh and said it would invite loss even to BASIC Bank.

Irregularities were discovered in BASIC Bank's disbursement of Tk 46 billion loans when Sheikh Abdul Hye Bachchu was the chairman and Kazi Fakhrul Islam the managing director.

The managing director was removed and the chairman stepped down amid the allegations.

Their involvement in the irregularities was proved in probe.