Dhaka, Bangladesh (BBN) – The government has dissolved board of directors of the state-owned BASIC Bank Limited and appointed Alauddin A Majid as its chairman.
The Bank and Financial Institutions Division of the Finance Ministry issued two separate notifications in this connection on Sunday.
The ministry said Alauddin A Majid has been appointed director/chairman of the BASIC Bank board of directors until further notice from the date of publication of the notification. He was also relieved of the duties as the chairman of the Bangladesh Krishi Bank, the notification added.
Earlier on Friday, BASIC Bank chairman Sheikh Abdul Hye Bacchu tendered his resignation to Finance Minister AMA Muhith at his Minto Road residence in the capital Dhaka.
The submission of resignation came days after the recommending by the central bank to the government for taking action against the board of directors of the state-owned bank as per provision of the existing Banking Companies Act.
Earlier on May 29 last, the Bangladesh Bank (BB) recommended that the government take action against the board of directors of the bank under clauses 46 and 47 of the Banking Companies Act 1991.
Under the banking law, the government is empowered to reconstitute or dissolve the board of directors of any of the state-owned banks.
Prior to the position, Mr. Majid was a director of the board of the same bank. He was previously managing director of the state-owned specialised bank.
Besides, Mr. Majid was also managing director of BASIC Bank Limited. He started his banking career in the BKB.
He obtained his Bachelor Degree from the American University of Beirut and Masters Degree from the University of Sydney. Mr Majid took higher training on different fields of banking at home and abroad. He hails from Aricha village under Shibalaya Upazila of Manikganj.
The central bank earlier had found different types of irregularities by the BASIC Bank in disbursing loans, which include non-verification of customer's creditworthiness, absence of ‘know-your-customer (KYC)’ procedures, and fresh lending to defaulters.
The BB investigations detected financial irregularities involving around BDT 45 billion of loans in the three branches located at Gulshan, Dilkusha and Shantinagar in Dhaka between 2009 and 2013.
The BASIC Bank Limited was one of the best state-run banks until 2009, when the government appointed Mr. Bacchu as chairman, a BB senior official said.
“The financial health of the state-owned bank showed a declining trend by the end of second quarters of 2011. But such trend turned into a vulnerable situation in the first quarter of the current calendar year,” the central banker told BBN in Dhaka.
The central bank had informed the government that the board of directors of the BASIC Bank cannot deny such irregularities and deteriorating financial position of the specialised bank, according to the central banker.
Meanwhile, the BB has taken a series of measures, including removal of the BASIC Bank Managing Director, Kazi Faqurul Islam, appointed an observer and imposed restrictions on both sanction and disbursement of fresh loan from three branches of the bank to protect depositors’ interest.
Currently, the BASIC Bank is running business across the country through 68 branches. The state-owned bank started its operations on January 21, 1989 aiming to facilitate small and cottage industries sector.
BBN/SSR/AD-06July14-4:45 pm (BST)
