Kazi Zahidul Hasan :
Most commercial banks both local and foreign are reportedly refusing to honour Letter of Credits (LCs) opened by BASIC Bank, apparently plunging the scam-hit state-owned bank into a fresh crisis, sources said.
Following the exposure of new crisis, the authorities of the BASIC Bank (Bangladesh Small Industries and Commerce Bank) have issued a ‘SOS’ to the ministry concerned and sought emergency fund from it to fight against the danger.
Admitting the matter, a senior BASIC Bank official, told The New Nation yesterday that other banks are showing apathy to accept back-to bank LCs opened by our bank, which is now running under huge capital shortfall resulted from recent loan scams.
He added: The loan scams have not only forced the ‘once solvent bank’ to embrace a bitter financial adversity but it has also helped tarnish image of the bank and consequently other commercial banks stopped accepting LCs from it. “Even, the London branch of Sonali Bank has recently denied accepting a LC from our bank,” he said.
Earlier, a central bank investigation found massive loan scams involving around Tk 4,500 crore in its three branches during 2009-2013.
The investigation of Bangladesh Bank (BB) also found that former BASIC Bank Chairman Abdul Hye Bachchu illegally influenced all activities of the state-owned bank, making it ‘pauper’.
“We sought Tk 1,372 crore emergency fund from the Finance Ministry to overcome the crisis,” said the BASIC Bank official, adding, “The fund was sought officially last week by sending a letter to it”.
The official noted that once the much-needed fund is received from the government, it will not only help to fill the capital hole of the bank but it will also help restore confidence of other commercial banks on BASIC Bank.
While asking for fresh fund, he said, the authorities of BASIC Bank have also submitted a ‘strategic plan’ to the Ministry to put the bank on right track again.
“We have promised to improve the financial health of the bank which had deteriorated under the previous Board of Directors. We have also assured to strengthen supervision, improve corporate governance and internal inspection to minimize risks in credit disbursement,” he said.
Besides, it has chalked out several plans to rebuild image of the bank, restore confidence of depositors and investors, more deposit collection from the both small savers and big savers.
The authorities also promised to ensure punishment of its corrupt officials who were involved in the financial irregularities and loan scandal of the bank and who resorted corruption and irregularities in the process of promotion and recruitment of its officials.
As part of the plan, the authorities of BASIC Bank have also set a target of recovering at least Tk 630 crore from top defaulters out of Tk 4,591 crore default loans as on June this year. The amount is about 41 per cent of the bank’s total outstanding loan.
It has fixed the target to bring down the default loan by 35 per cent by the end of this year and 10 per cent by the end of 2016. Besides, it has planned to mobilize 25 per cent deposit from the private sector’s depositors as it is now holding 89 per cent deposits from the state entities.
It will provide Tk 300 crore loans to the small entrepreneurs by the end of December this year. The bank has also set a target to earn Tk 150 crore profit by 2016, according to the plan.
As per the plan, the bank moves to announce pay cut to its senior officials to reduce its operating cost.
“We have already dissolved the credit committee and restructured risk management and audit and executive committees including members of the Board to ensure transparency in loan sanctioning and mitigate credit risk,” said the official of the Bank.
The capital shortfall of crisis ridden BASIC Bank stood at Tk 1,675 crore as on June, this year, whereas, it was only Tk 647 crore in December last, according to a central bank statistics.
