Scam-hit BASIC Bank extended loans to borrowers without obtaining credit rating, feasibility report, branch certificate on collateral, financial statements, business profile and proper loan proposals.

It even doled out loans to borrowers who do not have any legal status, according to the external audit into the scams at the state bank.

Two audit firms -- MABS & J Partners and SF Ahmed & Co -- conducted the functional audit on 214 borrowers of seven branches of the lender. 

It outright blamed the board led by its former chairman Abdul Hye Bacchu for presiding over a period of irregularities that cost the bank more than Tk 5,000 crore.

The audited branches were: Gulshan, Dilkusha, Karwan Bazar, Shantinagar and the main branch in Dhaka; and Agrabad and Jubilee Road in Chittagong.

The misappropriation of the depositors' money shows how the board, the management and the branches worked hand in hand to steal the money, it said.

The audit report said the board of BASIC Bank approved Tk 50 crore as credit for Delta System Ltd within a day of receiving the loan proposal from its Gulshan branch, in spite of the credit and disbursement committees of the head office's negative feedback.

The company did not have the required collateral securities when it applied for the loan.

The branch also accepted fake collateral securities of 233.5 decimal of land, and it did not take approval from the disbursement committee of the head office before disbursing the loans.

As of March 31, Delta System Ltd owed BASIC Bank Tk 128.42 crore.

Similarly, despite the negative feedback, Bangladesh Development Company Ltd got the term loan of Tk 75 crore. The loan was even disbursed without compliance to the required conditions.

The loan repayment capability was not assessed properly to safeguard the bank's interest, said the audit report.

The board approved a loan of Tk 50 crore for ARSS Enterprise within two days of submission of loan application. The loan proposal was not backed by required collateral securities as well as relevant documents.

Furthermore, the credit facility was enhanced to Tk 85 crore before receiving the proposal from Gulshan branch. Again, approval was not taken from the head office before disbursing the loans.

The Shantinagar branch extended Tk 76 crore in loans to Western Housing Ltd without making physical inspection of the mortgaged property and verifying the price of the machinery to be procured.  The branch forwarded the proposal to the industrial credit division of the bank on the next day of receiving the loan application without proper scrutiny and required documents.

The branch did not carry out any evaluation of transaction performance for the borrower with any other bank, according to the report. RK Foods Ltd was allowed to enjoy credit facility of Tk 39.86 crore although it submitted fake security documents.

The board approved the loan even if it did not receive any loan proposal. Besides, no credit committee proposal and board memo were found for the proposal. 

The audit report said no memo reference was mentioned in the extracts of the minutes of the board meeting held on December 23, 2010. The then board secretary included the board memo after the meeting in connivance with the chairman of the board.

The Kawran Bazar branch disbursed Tk 32.53 crore to Aristocrat Trading without: visiting the site, taking enough legal opinion about the chain of ownership of the land kept as security and taking approval from the head office before making disbursement.

The board did not pay any heed to the negative comments made by the bank's credit committee.

The same branch disbursed Tk 1 crore to Asia Steel Corporation in October 2013 without having any sanction letter from the head office. Even the head official declined the loan proposal.

The authority of the branch said the loan was disbursed as per verbal approval from “competent authority”, according to the audit report.