Aggressive lending has doubled state-owned BASIC Bank's non-performing loans (NPL) in just nine months this year, data shows.

The bank's NPL was 4.38 percent of its outstanding loans at the end of December last year, but the amount shot up to 8.10 percent in September this year, indicating a rise in its loan defaults.

Such loans were 4.83 percent of its total loans, both in 2009 and 2010.

Despite a dramatic rise in its bad loans, the bank's top officials think they are on the right track and the situation might improve at the end of the year.

“Some big loans were classified, pushing up the NPL of the bank,” Kazi Faqurul Islam, its managing director, told The Daily Star.

“Some of our loans were classified on qualitative judgment,” said Islam.

Data shows the bank received Tk 1,412.45 crore in deposits during January-September, but it lent Tk 1,456.71 crore during the period violating the Bangladesh Bank rules.

According to BB, a bank cannot lend more than 85 percent of its deposits.

“We're on an aggressive expansion drive; we cannot sit on idle funds,” said A Monaem Khan, deputy managing director of the bank.

Khan said the bank had only 32 branches in September 2009, but now it has 56, excluding those in the pipeline.

A fully government-owned bank different in its objectives from other banks, BASIC started its operations in January 1989.

The bank is a blend of development and commercial banks. Of the bank's total loanable funds, 50 percent are meant for small and cottage industries.

Recently, BASIC Bank came as news reports after the Anti-Corruption Commission launched an inquiry into alleged embezzlement of funds from the bank.

Finance Minister AMA Muhith also said in parliament that there were some irregularities in the bank, but he did not disclose the amount involved.

News: The Daily Star/Bangladesh/23-Nov-12