State-owned BASIC Bank made profits of Tk 540 million in 2008. The bank incurred a net loss of Tk 7.56 billion in 2019.
Sheikh Abdul Hye alias Bachchu, who was close to the government, was the chairman of the bank between 2009 and 2014. During the six years of his tenure, he destroyed the bank.
BASIC Bank still bears the burden of his malpractice. Stakeholders do not think that the bank will recover any time soon. Steps have not been taken against the loan defaulters of the bank while the amount of recovery embezzled from the bank is very low. Abdul Hye remains out of reach.
BASIC Bank officials said many of those who were given loans during the tenure of the former chairman, could not be traced now. Many have fled the country. And the loans cannot be recovered from many of those who remain in the country. Many claim that they did not receive the full amount of the loans.
The bank's condition is not improving although Abdul Hye Bachchu left the bank six years ago.
Bank’s financial picture at a glance
In December 2019, the deposits in the bank totalled Tk 118.30 billion and loans Tk 151.76 billion. The loan-deposit ratio ceiling is 103 per cent, though the standard ratio is 83.50 per cent.
Of the total disbursed loans, Tk 78.57 billion is in default, which is 52 per cent of the loans. The bank incurred a net loss of Tk 7.56 billion last year. Some 26 branches of 72 branches are facing losses.
Rafiqul Alam joined as managing director of BASIC Bank in July last year.
Speaking to Prothom Alo, he said, “I have been trying to improve the bank. We are endeavouring to recover money from the clients. Not all are sincere about repaying the money. We have taken initiative to collect deposits at low interest rates and to diversify services through branches.”
Sources in the bank said a total of Tk 1.97 billion was recovered from loan defaulters in 2019.
The government has offered special facilities to the loan defaulters. Under the scheme, a total of Tk 16 billion loans have been regularised. Another big problem of BASIC Bank is high fund expenditure.
Of the deposits, 77 per cent is on high interest rates and 23 per cent on low interest rates.
A total of Tk 100 billion of the deposits is from the government organisations. Public deposits total Tk 35 billion.
BASIC Bank MD Rafiqul Alam said, “The officials have been given a target to collect deposits on low interest rate.”
According to the financial report of BASIC Bank, the deposits were Tk 38.36 billion and loans Tk 27.26 billion in 2008. Of this, defaulted loans were Tk 1.25 billion, which is 4.59 per cent of the total loans. The bank made profits Tk 540 million in the year.
Scenario after Sheikh Abdul Hye took over
After the establishment of the bank in 1989, it was the norm for secretaries of the industries ministry to be appointed as chairman of the bank. Government officials became the directors of the bank.
After the Awami League government came to power in 2009, a big change was brought about in BASIC Bank.
Jatiya Party former MP Sheikh Abdul Hye Bachchu was made chairman of the bank in 2009. Since then the loans started increasing. He disbursed big loans on his own accord. In 2010, loans increased to Tk 46.34 billion. Loans increased to Tk 85.95 billion in 2012 and Tk 119.38 billion in 2014.
In 2010 and 2011, the profits increased to Tk 660 million and Tk 970 million respectively. In 2012, profits dwindled to Tk 30 million. In 2013, the bank incurred a loss of Tk 530 million.
In 2014, Abdul Hye resigned and the losses increased to Tk 1.10 billion that year.
Since the defaulted loans kept rising, losses increased too. The bank incurred losses of Tk 3.14 billion in 2015, Tk 14.93 billion in 2016, Tk 6.84 billion in 2017 and Tk 3.54 billion in 2018.
Abdul Hye indiscriminately recruited people. These people are now a burden for the bank.
The number of bank personnel was 776 in 2209. This increased to 964 in 2010, 1132 in 2011, 1657 in 2012 and 2,145 in 2013 and 2237 in 2014. Currently, the number of personnel is 2094.
He randomly opened new branches to appoint these people. When he joined as MD the number of branches was 32. The branches had increased to 68 when he quit the bank in 2014.
Abdul Hye was not available for comment about the discrepancies in the bank.
Of the top defaulters, Amar Bari Group took Tk 5.57 billion. Under the special loan facility scheme, this loan has been recently regularised.
Emerald Oil took loans of Tk 3.58 billion, AB Group Tk 2.16 billion, New Dhaka City Development Tk 1.97 billion, Fiaz Group Tk 1.95 billion, Bangladesh Development Company Tk 1.80 billion, Mimco Group Tk 1.65 billion, Vasavi, Tahmina and Water Haven Tk 1.58 billion, Well Tex Tk 1.46 billion, RI Enterprise Tk 1.31 billion, Rising Group Tk 1.30 billion, Delta System Tk 1.29 billion, Map & Muller Group Tk 1.22 billion, Crystal Steel and Ship Breaking Tk 1.22 billion and Regent Weaving Tk 1.19 billion.
The bank has been unable to contact Fiaz Group’s Wahidur Rahman and Belayet Navigations and Reliance Shipping Lines’ Gazi Belayet Hossain. Their firms have been shut down for long. Several defaulters fled the country, shutting down their companies.
The Anti-Corruption Commission filed a total of 18 cases in connection with the loan scam of the bank. But Abdul Hye Bachchu has not been charged in any of these cases.
Former finance minister Abul Maal Abdul Muhit blamed Abdul Hye Bachchu for the bank ‘robbery’. However, no steps have been taken against him.
Speaking to Prothom Alo, former governor of Bangladesh Bank, Khondaker Ibrahim Khaled, said Abdul Hye Bachchu, who destroyed the bank, has to be brought to book.
He said the government should take up a development plan to improve the bank.
* This report, originally published in Prothom Alo print edition, has been rewritten in English by Rabiul Islam