Tk 26b taxpayers' money to finance BASIC Bank's corruption

Staff Correspondent | Update:

The government has begun the process of purchasing the BASIC Bank's bonds worth 2,600 crore or Tk 26 billion to inject fresh capital into the scam-hit bank, authorities confirmed.

The bank has taken the move to issue the bonds to overcome the capital crisis created by swindling of more than Tk 4,000 crore or Tk 40 billion through loan forgery.

The initiative to provide the taxpayers' money to rescue the BASIC Bank was taken despite the impunity given to the alleged culprits of the bank and businesspeople who took the loans through fraudulent means.

Former BASIC Bank chairman Sheikh Abdul Hye Bacchu, who is said to be the mastermind of the loan scam, is out of touch and was not named in any official reports barring the one by the Bangladesh Bank. So is former managing director Kazi Fakhrul Islam.

However, officials admitted, the central bank has now provided the BASIC Bank the advice on how it could come out of the capital shortfall through insurance of bonds. Also, the Bangladesh Securities and Exchange Commission has made indication that it would not raise objection to the BASIC Bank's move.

"The process of purchasing Basic Bank bonds is currently underway," finance secretary Mahbub Ahmed told Prothom Alo on Tuesday.

As the bank was suffering from capital shortfall of Tk 2,423 crore or Tk 24.23 billion as of September, it took the initiative to issue 26 bonds each worth Tk 100 crore or Tk 1 billion.

At that point in time, more than 50 per cent (53%) of the bank's aggregate loan -- Tk 6,794 crore or Tk 67.94 billion out Tk 12,833 crore or Tk 128.33 billion overall -- has been classified as defaulted loan.

Once reputed as a profitable and good bank, BASIC Bank has started declining when Sheikh Abdul Hye Bacchu was appointed its chairman in the first year of the Bangladesh Awami League regime in 2009.

During his tenure as the bank's chairman between 2009 and 2014, an amount of Tk 4,200 crore or Tk 42 billion was stolen from the bank through forged loan proposals.

The government has already given Tk 2,300 crore or Tk 23 billion from the national exchequer to the bank to help it meet the capital deficit.

Despite widespread criticism, especially from bankers and economists, major culprits of the bank have not yet been brought to book.

When contacted, the bank's current chairman Alauddin A Majid claimed that action has been taken against those involved in the scam.

The managing director and the deputy managing director have both been fired and a case has been filed against them, Majid told Prothom Alo on Tuesday.

"The trial will be held in accordance with law of the land. We don’t have the power to take action against the board of directors," he added.

The current chairman mentioned that the bank could not be run with capital inadequacy. "So, if the bonds are issued, it will be able to rebound," he added.

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