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BASIC Bank to get Tk1,000cr from outgoing budget

  • Published at 10:13 pm June 8th, 2017
  • Last updated at 10:41 pm June 8th, 2017
BASIC Bank to get Tk1,000cr from outgoing budget
BASIC Bank is going to get Tk1,000 crore from the government as recapitalisation funds to improve clients’ trust damaged by massive corruptions. A Finance Division official said the money will be made available from the fund of Tk2,000 crore that was earmarked in the budget for outgoing fiscal year 2016-17 for recapitalisation of state-run banks along with issue of rights shares of state share capital. The Finance Ministry has sent a proposal in this regard to the finance minister, the official said. The decision comes at a time when there is growing controversy over the continuous salvage of state banks with taxpayers' money.
Also Read- BASIC Bank deposits drop to Tk1.37cr, default loans up
According to the proposal, Tk1,000 crore, Tk300 crore, Tk100 crore, over Tk164 crore and Tk100 crore will go into the coffers of BASIC, Sonali Bank, Rupali Bank, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank respectively from the allocation. Besides Tk185 crore will be provided to the IFIC as a subscription fee for rights shares. Also, Tk150 crore and Tk22 lakh will be provided to the House Building Finance Corporation and Grameen Bank respectively. The Bank and Financial Institutions Division sent the proposal out last week. An inter-ministerial meeting was held on May 2 over this issue.
For more stories on the national budget, look here: National Budget FY2017-2018
The meeting recommended providing the proposed funds to the banks from the budget for 2016-17. Finance Minister AMA Muhith has already said that the government would treat BASIC Bank with special emphasis to help it meet capital shortfall. He said the bank needs “special nurturing” as it’s condition is not normal now. “It cannot be compared with other banks.” The minister said BASIC Bank former chairman Sheikh Abdul Hye Bacchu was involved in loan scams in the state-run specialised bank.
Also Read- State banks likely to get Tk2,000cr recap funds in next fiscal year too
The Finance Ministry says that without recapitalisation funds, the bank will not be able to do business. BASIC is running its Letter of Credit business with the help of Sonali Bank. It has received Tk2,390 crore from budgets in the last five years. According to the Finance Division working papers, the capital shortfall of the BASIC Bank is Tk1,934.5 crore while the capital reserve ratio was only 7.55% in 2015. A Bangladesh Bank inspection detected many irregularities in four branches of BASIC - Motijheel, Shantinagar, Dilkusha and Gulshan - involving loans of around Tk4,425 crore taken out between December 2009 and November 2012. As the bank fell into severe financial crisis after the largest loan scam, the government dissolved the board of the bank in 2014. Later on, a new board took over the charge of bank and adopted a fresh strategy to revive the bank from a possible collapse.