BASIC Bank seeks more money

Shakhawat Hossain

Scam ridden BASIC Bank, facing capital crunch earlier this month requested the government to bail it out for the third timer since 2014, finance ministry officials said.
BASIC requested the government to issue interest-free recapitalization bonds worth Tk 2,600 crore to bail it out, they said.
Though the government recapitalized it twice in last two years, state run BASIC Bank is facing acute capital shortage, they said.
In 2014, BASIC Bank was given Tk 1,100 crore and in January it was given Tk 1200 crore from the exchequer to bail it out in the face of vehement opposition from economists.
Now, said the officials, BASIC bank wants the government to issue 26 Basic Bank recapitalization bonds each worth Tk 100 crore to recapitalize the bank in perennial crisis.
BASIC Bank’s bankruptcy stemmed from massive shoddy loans extended by its board of directors led by former chairman Abdul Hye Bacchu from 2009 to 2014.
The government took no legal action against Bachchu though Bangladesh Bank’s as well as internal probes found incriminating evidence of his complicity in extending hefty loans to fictitious borrowers.
The government should compel BASIC BANK to recover all its shady lending, said former caretaker government adviser Mirza Azizul Islam.
He also said that the government should refrain from providing bail-out funds to the BASIC Bank.
Mirza Aziz as well as other economists consistently opposed providing bail out funds to BSIC Bank in the past too.
BASIC Bank’s latest request seeking recapitalization for the third time would be reviewed by the bank and financial instantiation division in the next month, said officials.
Profit earner until 2012, BASIC Bank began to sink in 2013.
BASIC’s shady lending exceeded Tk 6,000 crore on September 30, 2014.

Policy Research Institute’s executive director Ahsan H Mansur asked the government to stop injecting fresh funds in scam ridden banks by way of cash or bonds.
He also demanded stopping lending operations by state-run banks with records of shady lending to check their dishonest practices.
In April, Finance minister AMA Muhith backed out from an earlier announcement he made while presenting in Parliament the budget for the previous fiscal that a commission would be appointed for the improvement of the ailing state run banks.

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