The government dissolved the board of directors of the state-owned BASIC Bank on Sunday — a day after its chairman Sheikh Abdul Hye Bacchu resigned.
The government also appointed Alauddin A Majid as the new chairman of the nationalised specialised bank. Majid is currently serving as the chairman of Bangladesh Krishi Bank.
The Bank and Financial Institutions Division of the Ministry of Finance issued three separate gazette notifications to this effect on Sunday.
The board of directors of the BASIC Bank was dissolved as per the Section 46 of the Bank Company Act-1991.
Outgoing BASIC Bank chairman Sheikh Abdul Hye submitted his resignation letter to Finance Minister AMA Muhith at the minister’s residence on Friday.
Established in 1989, BASIC was one of the best-run government banks until 2009, when the government appointed Abdul Hye as the chairman.
The government appointed Abdul Hye as the chairman of the BASIC Bank in September 2009 on contractual basis for three years. Later his tenure was extended by two years in September 2012.
Following the extension of his appointment, the bank's performance started eroding.
Bangladesh Bank on May 29 this year sent a letter to the Bank and Financial Institutions Division of the Ministry of Finance recommending dissolution of BASIC Bank for widespread irregularities and corruption.
The central bank also recommended the government taking actions against the bank's chairman and board of directors as per law for their alleged involvement in the bank’s Tk 4,500 crore loan scams.
But the government is yet to take any action against the bank's top management.
According to the sources at the Ministry of Finance, the government pushed the bank's chairman for stepping down and he finally submitted his resignation letter on Friday.
After the loan scam in BASIC Bank, the central bank recently took some punitive measures against the bank.
Bangladesh Bank on May 25 removed BASIC Bank managing director Kazi Faqurul Islam on charge of irregularities and corruption.
On May 26, the central bank imposed a ban on disbursing loans from three scam-hit branches of BASIC Bank — Motijheel, Shantinagar, Dilkusha and Gulshan branches.
On May 29, the central bank recommended the Ministry of Finance dissolving BASIC Bank's board as the governing body was found to be complicit in the irregularities.
On June 4, the bank's Gulshan branch manager S.M Waliullah was suspended on allegations of irregularities in loan disbursement.