Finance Minister AMA Muhith expressed his concerns over mammoth cash deficit of BASIC Bank as the crisis kept the state-owned lender from doing business with other financial institutions.
“Cash deficit in BASIC now totals around Tk3,600 crore, which should be eased to run business with other banks,” he made a note on the bank’s summary audit report. He added the bank possessed enough wealth to operate business.
Muhith, however, said the bank showed a good performance in recovery of loans and readjustment of default loans.
A finance division official said the bank would not receive Tk2,000 crore to meet its capital shortfall soon, which might come at the end of December this year.
Finance minister agreed to provide the sum from budget allocation against the bank’s demand of Tk5,000 crore.
The audit report, which was conducted on 2010-14 data, recommended reducing operating cost and lending to small and medium enterprises.
It also asked for departmental actions against staff and officials involved with the irregularities and maintain strict policy in approving new loans.
It said the classified loans and advances of the bank was Tk8,108 crore at the end of 2014. Of that amount, Bangladesh Bank gave permission to BASIC Bank to keep Tk2,999 crore as block assets.
BASIC Bank put a provision of Tk430.64 crore against classified loans while the total possible provision was Tk2,363.77 crore.
The bank’s former management showed Tk312.61 crore as income of the bank though it was supposed to be kept as interest suspend of classified loans and advances.
The bank did not put any provision on the purchase of branch spaces at Tk91.98 crore.
The audit found actual capital shortfall is Tk3,609.13 crore. Of the amount, necessary capital is Tk923.64 crore against reserve negative capital of Tk2,685.49 crore.
The bank’s risk-based assets against necessary capital was 29.08% at the end of 2014 while the rate of commercial banks is usually 10%.
The report mentioned 13 irregularities - big and small - which included approving loans beyond the limit and without collateral and also increasing grace periods.
Besides, the instalments of repayment were reduced without consent of the respective branch which provided the loan and clients took several loans showing same single asset as collateral in all cases.
The bank authorities also did not make it sure that the loans were being utilised properly in the announced activities.
“I had a discussion with the BASIC board of directors which already identified those involved with the 2012 big loan scam and the defaulters,” finance minister said.
