State-owned BASIC Bank, under fire over financial irregularities, has an unrecoverable debt that has soared nearly 30 times over the past four and a half years, reports bdnews24.com. It currently has a capital deficit of over Tk 6.58 billion. Information provided by the finance ministry at the meeting of a parliamentary standing committee on government institutions on Thursday showed the specialised bank had a Tk 1.41 billion bad debt at the end of 2009. The amount swelled to Tk 41.57 billion by June this year. In 2009, the bank loaned out Tk 4.56 billion of its total capital to nine institutions, of which 4.83 percent turned out to be bad loans. At present the percentage stands at 36.55. The amount of disbursed loan went up consistently after 2009.
Eight institutions were given Tk 4.98 billion in loan in 2010, while Tk 8.81 billion was given to 12 institutions as loan in 2011. Tk 19.65 billion was loaned to 23 institutions in 2012 and last year, 20 institutions received Tk 23.05 billion in loans from the bank. The committee has held the bank's board responsible for the irregularities and recommended legal actions.
After Thursday's meeting, committee chief Shawkat Ali said preliminary investigation showed that the board members and officials were partners in crime as far as the financial irregularities were concerned. “We are waiting to see what the new board of directors do,” Ali said.
"If their steps are not proper, then this committee will investigate the matter and make necessary recommendations," he said. BASIC Bank's managing director was removed last May amid loan irregularities while its chairman stepped down last week.
A new chairman was appointed two days later and the board was revamped. Ali said only removing those involved was not enough. "They must be punished," he said. So far, the committee has not found any link between the apex Bangladesh Bank and the irregularities at the Basic Bank.
The finance ministry said it found irregularities over loan disbursement at the bank's main branch and other branches at Gulshan, Karwanbazar, Shantinagar and Dilkusha. While approving loans in several cases, the bank overlooked rules and accepted fake documents from third parties as mortgage.
The ministry claimed to have obtained information about loan proposals that had been cleared without visiting the businesses, not collecting CIB reports of many customers, hastily opening running accounts to approve loan proposals within a short time and approving loans without necessary deposit.
It has asked the new BASIC chairman to investigate the irregularities and file a report within a month. Those involved will be prosecuted by the Anti-Corruption Commission, the ministry said. The parliamentary committee has recommended investigating the bank's financial irregularities and an elaborate report on it. Committee member Subid Ali Bhuiyan said changing the board alone would not help. "Exemplary punishment has to be handed down so that such irregularities do not take place in future."

he government on Monday appointed four directors to constitute the board of directors of the scam-hit Bangladesh Small Industries and Commerce Bank Limited. They newly appointed directors are : Hasan Mahmood FCA, former managing director of Bangladesh House Building Finance Corporation Raihana Anisa Yusuf Ali, banks and financial institutions division joint secretary Mamun Al Rashid and Dhaka University Professor of the department of Accounting and Information System Mujib Ahmed. A circular by the banks and financial institutions division said they were appointed to bring professionalism and dynamism into the bank’s management. Officials said two more directors will be appointed to the seven-member board of directors soon. Earlier, the government dissolved the board of directors of the BASIC Bank Limited after resignation of its controversial chairman Sheikh Abdul Hai Bachchu. It appointed Bangladesh Krishi Bank chairman Alauddin A Majid as the new chairman of BASIC Bank on Sunday and relieved him from the Krishi Bank. Alauddin A Majid held a meeting with the bank’s staff on Monday at its headquarter in the city. Briefing reporters after the meeting, he said that they would take initiative to recover the loans and improve the financial health of the bank. He noted that it would take time to see any improvement. There were anomalies worth more than Tk 4,500 crore in the transaction of the Basic Bank in recent years and the Bangladesh Bank asked the finance ministry to dissolve the BASIC Bank board of directors a couple of months ago. Loan scams in the BASIC Bank – a specialised bank once touted as one of the best-run public sector banks – was first detected in November 2012. Abdul Hai Bachchu, who was appointed chairman in 2009, was rewarded with reappointment in 2012. In June, the BB fired BASIC Bank managing director Kazi Faqurul Islam for his involvement in the loan scam. The default loans of BASIC Bank soared to Tk 2,557 crore last March from Tk 1,417 crore in February. Alauddin A Majid said, ‘I have already asked the senior management to provide data and information about the latest financial situation of the bank. After getting the data, I will take decision what type of strategy will be taken to improve the bank’s financial health’. He said that he had earlier gathered experience as managing director of the Basic Bank and that knowledge would help him to improve the bank’s health. He said that he had already asked the senior officials of BASIC Bank not to play ‘blame game’ about the irregularities. He said, ‘I will not allow the external interference on the activities of the board of directors and the management. The board and the management will take final decision about the bank’s operation.’ He said that the board would take decision in the quickest possible time to appoint a new managing director and chief executive officer for the bank. BASIC Bank acting managing director Fazlus Sobhan, deputy managing director Kanak Kumar Purkayastha and other senior officials of the bank attended the briefing. 

Banking division will signed a performance guarantee contract with the all state owned banks as there had no responsibility and accountability in the banking sector before’

Banks' credit growth continues to stutter despite the diffusion of political tension in January as banks exercise caution in lending to avoid bad loans.
As of May 15, the sector's overall credit growth from a year ago stood at 8.97 percent, according to central bank statistics.
The private banks' credit increased 14.07 percent, with some recording 20 percent to 38 percent growth.
But state banks saw their credit decline 5.11 percent and foreign banks 0.22 percent. Among the four state banks, Rupali's credit increased significantly, while the other three saw a fall.
Due to various corruptions including the Hall-Mark scam, the loan flow of state-owned banks has stalled, said Khondker Ibrahim Khaled, a former central bank deputy governor.
“The bank officials in general are in fear of giving out fresh loans,” he said.
However, Khaled said fresh loans have not completely stopped at state banks thanks to persuasion by influential quarters.
“Because of this the default loans of state banks are still on the rise—the central bank and the finance ministry need to take strict measure against this persuasion culture.”
Of the foreign banks, Standard Chartered Bank and HSBC saw their credit grow slightly.
However, most of the banks saw their deposits swell during the period, which squeezed their profits. As of May 15, overall deposit grew 16.48 percent year-on-year.
In a bid to maintain profit levels and log in high credit growth, many banks went for aggressive lending to rework the excess liquidity, according to Khaled.
“But banks that follow conservative banking have not yet gone for aggressive lending as uncertainty still looms over the business environment.”
Helal Ahmed Chowdhury, managing director of Pubali Bank, said loan growth of some banks are slow as they are exercising due diligence in sanctioning loan proposals.
Also the vice-chairman of the Association of Banks Bangladesh, Chowdhury said every bank must avoid aggressive lending to avert bad lending, while citing the huge amount of loans that have become defaults in Chittagong after the banks aggressively lent through Loan against Trust Receipt.

Md. Habibur Rahman, Managing Director, Al-Arafah Islami Bank Limited, and Engr. Uttam Kumar Roy, Commercial Manager of Dhaka WASA, exchange documents after signing an agreement at the Board Room of Al-Arafah Islami Bank in Dhaka recently.

 Al-Arafah Islami Bank Limited signed an agreement with Dhaka Water Supply and Sewerage Authority (WASA) on “Water and Sewerage Online Bill” at the Board Room of the bank in Dhaka recently.

Md. Habibur Rahman, Managing Director, Al-Arafah Islami Bank Limited and Engr Uttam Kumar Roy, Commercial Manager of Dhaka WASA signed the agreement on behalf of their respective organisations, said a press release.

Md Zafrin Hossain, IT Head, A. Karim Patwary, Deputy Chief Revenue Officer and Md. Arifuzzaman, Assistant Programmer of Dhaka WASA were present.