The scam-hit BASIC Bank is in recovery mode that has led its financial health to pick up slowly.
Declining default loan rate and efforts to recover loans from defaulters are attributed to the improvement.
The default loan rate of the bank stood at 43.77% in September last year from 57.15% in December the previous year, according to the bank’s statement.
The capital shortfall of the bank shrunk to Tk2,991 crore in September, 2015 from Tk3,609 crore in December, 2014, thanks to Tk790-crore fund injection into the bank by the government.
The capital adequacy ratio (Ratio of bank’s capital to its risk) of the bank improved to negative 15.90% from negative 29% during the same period.
The bank started to regain its financial health from the beginning of last year, adopting the new strategy by the new board, said a senior executive of Bangladesh Bank.
The central bank is also satisfied with the performance of the new board, he said.
The board reduced the default loans of the bank significantly by regularising a huge amount of loans through rescheduling over the last year, said Alauddin A Majid, chairman of BASIC Bank.
He said the loan was rescheduled not only to reduce default loan but to acknowledge those loans given without following due procedures.
The bank was also able to make profit in December last year that reflected a ray of hope, Majid added.
The bank rescheduled its total loans of Tk1,334 crore over nine months of last year, the highest amount as an individual bank among the state-owned banks.
Of the other state-owned banks, Sonali Bank rescheduled its loans of Tk820 crore, Janata Tk1063 crore, Agrani Bank Tk298 crore and Rupali Tk824 crore during the period.
Though the default loan rate was shrinking, bad loans were rising. The bad loan rate climbed to 82.87% in September last year from 73.79% in December of previous year.
BASIC, however, enhanced its efforts to recover default loans from defaulters. The recovery of default loan amount improved to Tk469 crore in September last year from Tk269 crore in December of previous year.
Though the bank is recovering from the shock of loan scam of over Tk4,000 crore slowly, it failed to gain depositors’ confidence, leading to negative deposit growth.
The customer deposit growth of the bank deteriorated continuously, posting negative 11.89% growth in September last year from 5.68% growth in December of previous year.
The total deposit of the bank stood at Tk12,329 crore, down from Tk13,609 crore during the period.
The bank chairman explained that the deposit growth declined as some large deposits were given up to curb costs.
He said many deposits were taken at high interest which is expensive for the bank to bear at this moment.
“Though the bank let some big deposits go, it still has enough money to lend,” BASIC chairman claimed.
The operating expense of the bank reduced to Tk195 crore in September last year from Tk227 crore in December of previous year, according to the central bank data.
