BASIC makes headway in loan recovery

BASIC Bank's new management has managed to recover cash of CHF 1,040 million in the last three years, but its overall financial situation continues to be weak.

In August, half of the total loans of Tk bank 14,090 crore were ineffective against which he could not generate income, according to a report he laid on Sunday before a parliamentary committee.

Instead, the financial indicators of the state-owned bank are in the dangerous area for impaired loans.

Between 2010 and 2014, unbridled irregularities and corruption had an extremely negative impact on the general activities of the bank; a serious deterioration in the various financial indicators was evident.

Since the bank began its trip in 1989, it remained a profitable organization until the first half of 2009 when Sheikh Abdul Hye Bacchu took over and the decline began.

The report presented a comparative picture and stated in 2009 that the bank's classified loans accounted for only 4.83 percent of its total outstanding loans, which varied to 67.91 percent at the end of 2014.

Until 2009, the bank had no provision and no capital deficit.

But in 2014, the provisioning deficit was Tk 3.866 crore and the capital deficit Tk 3 566 crore.

Despite information on irregularities, Bacchu received a second term as president in 2012.

Finally, in June 2014, as reports of rampant irregularities became unavoidable, Bachchu had the opportunity to resign instead of being fired by the government.

In July 2014, the new board took over, headed by the former chief executive of BASIC Alauddin A Majid as president.

Over the past three years since taking over the new management, Tk 4.008 crore of loans have also been postponed, said the report. As a result, at the end of August, the amount of loans classified was 51 per cent, which is expected to decrease by 40 per cent by the end of the year.

Over the past three years, BASIC has disbursed new borrowings of Tk 2,152 crore to account for past due loans at Tk 14,090 crore.

The bank recorded losses up to Tk 122 crore, but as of August this year it has realized a profit of Tk 32.62 crore, which is expected to hit Tk 60 crore at the end of the year.

Over the past three years, the government has given BASIC Tk 3.390 crore to deal with its capital deficit, but it still has a deficit of Tk 2.210 crore. In the report, BASIC said that it was not distributing the money received from the government as a loan.

Of the amount, the bank invested Tk 2,799 crore in Treasury bonds and Tk 929 crore on the money market. If government money is deducted, the bank's capital deficit is at Tk 5,600 crore, which has accumulated between 2009 and 2014 through impaired loans.

A senior BASIC official told The Daily Star that they are still struggling to achieve bad loans.

After taking over the new management, they found that several companies without traces had received loans by their predecessors. They were able to trace 50 companies, but seven borrowers remain to be identified although three years have passed.

In the report, BASIC gave the committee a list of 628 defaulting companies that was due Tk 6,538 crore to the bank as of June 30th. BASIC told the committee that to make the loans, he filed deals with Artha Rin Adalat.

But many of the companies in question have filed motions with the High Court. The number of trial cases at the end of the previous month was 326. Together, companies had to Tk 4.535 crore to the bank. BASIC MD Khondoker Md Iqbal told the parliamentary committee that the former president of the bank made a huge mess in giving the loans.

The MD told the committee meeting that while granting loans, the former president did not follow the rules of the central bank, the banking division and even the bank.

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