Kazi Zahidul Hasan :
State-owned BASIC Bank has once again sought Tk 2,500 crore as fresh bailout fund from the government to bolster its capital base that earlier suffered from a huge loan scandals forcing the bank to nosedive.
It lost over Tk 3,500 crore in fake loans provided to a vested business quarter when Sheikh Abdul Hye Bachchu was the Board Chairman. He is now facing questioning by the Anti-Corruption Commission (ACC) although it tolerated him so far from 2014 to bring him under scanning.
Prior to Bachchu’s appointment BASIC Bank was the best public sector bank in the country with strong financial health and portfolio management.
The bank is now surviving on huge bailout schemes of the government from annual budget. The government has pumped in about Tk 3,390 recapitalisation fund in the scam-hit bank so far to meet its capital shortfall.
The troubled bank yesterday sent a proposal to the Finance Ministry, seeking Tk 2,500 crore fresh recapitalisation funds as it is facing severe liquidity crisis to run usual banking service.
Last week, Sonali Bank Limited (SBL) sought Tk 6,000 crore as fresh capital from the government sending a similar proposal to the Ministry for liquidity crisis when its loan outstanding is all time high because of defaulted loans with big business houses and similar loan scandal led by Hallmark Group.
Badly-hit by capital shortfall, Sonali Bank said it needed immediate recapitalization by the huge amount to boost its capital base, restore depositors’ confidence and to follow the Basel-III norms that means it has internationally acceptable standard for transactions at home and abroad.
Asking not to be named, a senior BASIC Bank official told The New Nation on Sunday, “We sought fresh capital as the bank is running with huge capital shortfall. The government fund will boost the capital base and enhance lending capacity to productive sector.”
He said, first of all the fund is necessary to enable the bank to have minimum capital requirement to 10 percent Risk Weighted Asset Ratio, improve CAMEL Ratings, restore correspondent relationship with foreign banks and depositors confidence.
“Despite capital infusion several times by now by the government, the bank is still running with big capital shortfall, forcing it again to ask for fresh capital,” he added.
It is a big wonder why the bank is failing to overcome the liquidity shortfall. If the government injects money and it fails to improve the situation, the recapitalization seems heading towards supporting continued mismanagement.
The BASIC Bank official said the financial health of the bank was ruined seriously after certain vested groups had swindled funds from the bank. During Bachchu’s period fake business firms were registered overnight and sanctioned loans indiscriminately. It has led to a big plunge in bank resources, affecting lending business, foreign trade and wrecked depositors’ confidence. “Still we’re heeling the wounds,” he added.
At the end of December 31 last year, BASIC Bank reported an estimated shortfall of Tk 2,339 crore capital requirement and Tk 2,527 crore provision shortfall against its disbursed loans. The bank’s total classified loans stood at Tk 7,412 crore by that time.
In 2016 BASIC Bank reported Tk 2,866.71 crore capital shortfall and Tk 2,825.89 crore provision shortfall while its total classified loan stood at Tk 7,300.69 crore by that time.
The bank made Tk 42.93 crore operating profit in 2017 while it had made Tk 9.08 crore profit in the previous year.
