Special Correspondent :
The scam-hit BASIC Bank has announced pay cut for its executives as the state lender was struggling to survive amid recurrent losses, caused by massive loan irregularities and growing toxic loans.
Authorities of the bank issued an order in this regard on Monday citing that the existing salary structure of the bank has been withheld with effect from December 22.
The bank’s latest decision was transmitted to its all the branches through a letter, signed by Ahmed Hossain, General Manager, Human Resources Division.
BASIC Bank adopted its own salary structure in 2013 that offers highest pay of its officers and employees than other state-owned banks.
“It will not be possible to pay the bank officials as before due to losses of the last seven years,” reads the letter, adding, “BASIC Bank’s officials have higher salary and allowance than other state-owned banks. But this extra pay has become impossible for the bank to bear.”
The letter further states that from now on, the officers of the Basic Bank will get salaries in accordance with the framework of the ‘Job (Banks, Insurance and Financial Institutions) (Salary and Allowances) Order 2015 issued by the Finance Division of the Ministry of Finance.
“Having made record losses during the last seven years, the board of the bank decided to pay
cut of their executives in an last ditch attempt to keep the troubled state lender functioning,” a senior BASIC Bank official told The New Nation yesterday on condition of anonymity. He said the decision was followed by a lengthy discussion with the bank’s board of directors at its 487th meeting held on December 11.
“The bank plunged into the bad patch of recurrent losses due to big loan scams. It has hit the bank hardest and now it is struggling to survive,” he added.
A vested group under the cover of 16 fake companies was able to misappropriate Tk 4,500 crore from the bank’s four branches between 2009 and November 2012.
These loans were approved by the bank’s the then chairman Abdul Hye Bachchu without proper scrutiny and collateral in violation of banking rules and regulations.
The bank also gave loans to several companies and approved loans to clients soon after they had opened accounts. The massive loan irregularities have dented reputation of the bank, which was once regarded as the country’s best bank.
After conducting a probe for several years, ACC filed a total of 56 cases against 156 individuals in three police stations in Dhaka at the end of 2015. Most of the accused were officials of the state-run bank, and the rest were connected to lending institutions and bank oversight organizations. But controversy followed when it was found that Bachchu and other prominent members of the board of directors were not on the list of suspects. The ACC claimed that they had no evidence of Bachchu’s involvement in the loan scam.
Bachchu was made chairman of BASIC Bank in September 2009 on contractual basis for three years, which was later extended by two years in September 2012. Bachchu’s led the bank till July 5, 2014, when he tendered his resignation to finance ministry on Bangladesh Bank’s advice after its investigation found the massive loan irregularities.
Since then the state-owned bank has not been able to make profit and its financial health continue to decline.
BASIC Bank’s losses piled up to Tk 3,015 crore in the last six years, and its bad loans soared to Tk 9,000 crore, which is 60 per cent of its disbursed loan. The bank’s capital and provision shortfall also reached nearly Tk 3,000 crore.
“The core function of a bank is to open LC, collect deposit, disburse loans and recovery. But these activities are virtually stopped at BASIC Bank due to its dented image cuased by the loan scandals. Many clitents have already left the bank due to its tarnished image and eroding financial helath,” said the BASIC Bank official.
He said the bank is now in dire needs of recapitalisation fund to maintain its operation. “We have already sought for Tk 4000 crore bailout fund from the government,” he added.
The government has so far pumped Tk 3,390 crore as bailout funds to the troubled bank to make its operation unhurt.
Meanwhile, employees of the BASIC Bank staged demonstration at its head office in Dhaka following decreasing of their salaries.
More than two hundred employees of the state-run bank started demonstration around 11:00am on Monday confining their managing director.
The scam-hit BASIC Bank has announced pay cut for its executives as the state lender was struggling to survive amid recurrent losses, caused by massive loan irregularities and growing toxic loans.
Authorities of the bank issued an order in this regard on Monday citing that the existing salary structure of the bank has been withheld with effect from December 22.
The bank’s latest decision was transmitted to its all the branches through a letter, signed by Ahmed Hossain, General Manager, Human Resources Division.
BASIC Bank adopted its own salary structure in 2013 that offers highest pay of its officers and employees than other state-owned banks.
“It will not be possible to pay the bank officials as before due to losses of the last seven years,” reads the letter, adding, “BASIC Bank’s officials have higher salary and allowance than other state-owned banks. But this extra pay has become impossible for the bank to bear.”
The letter further states that from now on, the officers of the Basic Bank will get salaries in accordance with the framework of the ‘Job (Banks, Insurance and Financial Institutions) (Salary and Allowances) Order 2015 issued by the Finance Division of the Ministry of Finance.
“Having made record losses during the last seven years, the board of the bank decided to pay
cut of their executives in an last ditch attempt to keep the troubled state lender functioning,” a senior BASIC Bank official told The New Nation yesterday on condition of anonymity. He said the decision was followed by a lengthy discussion with the bank’s board of directors at its 487th meeting held on December 11.
“The bank plunged into the bad patch of recurrent losses due to big loan scams. It has hit the bank hardest and now it is struggling to survive,” he added.
A vested group under the cover of 16 fake companies was able to misappropriate Tk 4,500 crore from the bank’s four branches between 2009 and November 2012.
These loans were approved by the bank’s the then chairman Abdul Hye Bachchu without proper scrutiny and collateral in violation of banking rules and regulations.
The bank also gave loans to several companies and approved loans to clients soon after they had opened accounts. The massive loan irregularities have dented reputation of the bank, which was once regarded as the country’s best bank.
After conducting a probe for several years, ACC filed a total of 56 cases against 156 individuals in three police stations in Dhaka at the end of 2015. Most of the accused were officials of the state-run bank, and the rest were connected to lending institutions and bank oversight organizations. But controversy followed when it was found that Bachchu and other prominent members of the board of directors were not on the list of suspects. The ACC claimed that they had no evidence of Bachchu’s involvement in the loan scam.
Bachchu was made chairman of BASIC Bank in September 2009 on contractual basis for three years, which was later extended by two years in September 2012. Bachchu’s led the bank till July 5, 2014, when he tendered his resignation to finance ministry on Bangladesh Bank’s advice after its investigation found the massive loan irregularities.
Since then the state-owned bank has not been able to make profit and its financial health continue to decline.
BASIC Bank’s losses piled up to Tk 3,015 crore in the last six years, and its bad loans soared to Tk 9,000 crore, which is 60 per cent of its disbursed loan. The bank’s capital and provision shortfall also reached nearly Tk 3,000 crore.
“The core function of a bank is to open LC, collect deposit, disburse loans and recovery. But these activities are virtually stopped at BASIC Bank due to its dented image cuased by the loan scandals. Many clitents have already left the bank due to its tarnished image and eroding financial helath,” said the BASIC Bank official.
He said the bank is now in dire needs of recapitalisation fund to maintain its operation. “We have already sought for Tk 4000 crore bailout fund from the government,” he added.
The government has so far pumped Tk 3,390 crore as bailout funds to the troubled bank to make its operation unhurt.
Meanwhile, employees of the BASIC Bank staged demonstration at its head office in Dhaka following decreasing of their salaries.
More than two hundred employees of the state-run bank started demonstration around 11:00am on Monday confining their managing director.
