BASIC Bank, once a prominent state-run bank of the country, has suffered a whopping loss of Tk 42.3 billion over the course of a decade.

There was a time when the bank prospered with highly paid officials, profitable operations and high-profile clientele, including the top business conglomerates.

The secretary of industries ministry used to serve the bank as its ex-officio chairman.

However, its fortune took a turn on 10 September 2009, when a new board was formed with former lawmaker Sheikh Abdul Hye as chairman. It was followed by a collapse in the bank’s financial management.

The timeline of Basic Bank scam
Prothom Alo infographic

Under his chairmanship from 2009 to 2014, the bank went through unparalleled irregularities and corruption, resulting in the embezzlement of Tk 45 billion, according to investigations. The whooping loss is the aftermath of the massive irregularities.

The bank suffered a maximum loss of Tk 14.93 billion in 2016 and it declined to Tk 1.3 billion in 2022.

BASIC Bank is still grappling with financial crises though it has been nine years since the departure of Sheikh Abdul Hye from the bank.

During his tenure, a large amount of money was loaned to spurious companies with high-interest deposits. The money remains unrepaid, but the bank has to pay a good sum of money to depositors as interest.

Its poor financial health did not prompt the government to take any decisive action to salvage the bank. Moreover, the successive boards of directors have mainly focused on self-preservation and refrained from granting new loans or engaging in discussions with the authorities to revive the bank.

Sheikh Abdul Hye was found involved in the notorious money embezzlement saga in various reports of Bangladesh Bank and other government agencies. Still, the government facilitated an honorable departure for him.

He bought properties and ships with the embezzled money and had been leading a luxurious life for the following eight years. Later, the Anti-Corruption Commission (ACC) accused him in cases upon widespread criticism and rebuke by the court, parliamentarians and experts.

The ACC has recently given 59 charge sheets against 145 individuals, with Sheikh Abdul Hye being indicted in 58. Surprisingly, the ACC did not charge any directors who had served in the BASIC Bank board under his chairmanship.

The commission on Monday approved the proposal to submit the charge sheets against Sheikh Abdul Hye to the court, said its secretary Mahbub Hossain in a briefing at the commission office.

It was learnt that around 58 per cent of the bank's total disbursed loans were in default as of March this year. Its total disbursed loan is Tk 128.06 billion while the defaulted amount is Tk 74.25 billion. No financial indicators of the bank are now in a comfortable state.

However, the bank in 2022 managed to collect Tk 5.56 billion of defaulted and written off loans, showing an increase from the collection of Tk 1.99 billion in 2021. Despite the rise in collection, the bank saw no substantial decrease in its accumulated defaulted loans.

The bank reported an operating loss of Tk 1.09 billion in 2022, compared to Tk 3.86 billion in the previous year. The lower loss has been attributed to rise in non-funded income and low-interest deposits.

Its low-cost deposits rose by Tk 2.36 billion to Tk 37.13 billion in the previous year, while the non-funded income increased by Tk 3.11 billion to 3.78 billion.

In 2022, BASIC Bank received Tk 27.22 billion in imports, Tk 29.31 billion in exports, and Tk 2.49 billion in expatriate income.

Out of its total loan portfolio of Tk 128.06 billion, an amount of Tk 43.9 billion is held up by 25 clients as of December last year.

According to the bank sources, the top defaulting clients are Amader Bari, New Dhaka City Development, Emerald Auto Bricks, Ali Group, Bangladesh Development Company, Nilsagar Agro and Allied, Fiaz Group, Aristocrat Group, Mimco Carbon Limited, Vasavi Fashions, Welltex Group, Rising Group, Crystal Steel & Shipping, Bashar Group, and others.

Anisur Rahman, managing director of BASIC Bank, could not be reached for his comment over the situation as he is abroad.

In a recent conversation with Prothom Alo, the BASIC Bank MD acknowledged the challenges in rectifying the bank's financial situation and attributed them to the high interest of deposits .

He underscored the need for maintaining a steady flow of deposit collections and loan disbursements to keep the bank in operation.

The bank could have been taken back to the previous position had it received low-interest deposits under a government initiative, he added.