Dhaka, Bangladesh (BBN) – Sheikh Abdul Hye Bacchu, chairman of the BASIC Bank limited, has resigned days after recommending by the central bank to the government for taking action against the board of directors of the state-owned bank.
Mr. Bacchu submitted his resignation letter to Finance Minister AMA Muhith at the minister’s residence in the capital on Friday, sources confirmed.
The sources, however, said the Bank and Financial Institutions Division of the Finance Ministry may issue a notification in this connection on Sunday.
Earlier on May 29 last, the Bangladesh Bank (BB), the country’s central bank, recommended the government for taking action against the board of directors of state-owned specialised bank under clauses 46 and 47 of the Banking Companies Act, 1991.
Under the existing banking companies act, the government is empowered to reconstitute or dissolve the board of directors of any state-owned bank.
The BB’s latest move came against the backdrop of deteriorating financial heath of the state-owned bank due to mismanagement and irregularities in the recent years.
The central bank earlier found different types of irregularities by the BASIC Bank in giving loans, which include non-verification of customer's creditworthiness, absence of ‘know your customer (KYC)’ procedures, and extending loans 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 the capital between 2009 and 2013.
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 state-owned bank, according to the BB officials.
The provisional operating profit of the state-run bank has registered a drastic fall by nearly 65 per cent during the first half of the current calendar year (2014) over the corresponding period of the previous year.
The operating profit of the troubled specialized bank during the January-June period of 2014 was calculated at BDT 465.70 million, compared to BDT 1.35 billion in the same period of 2013
Meanwhile, the BB has taken different 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 businesses across the country through 68 branches. The state-owned bank started its operations from January 21, 1989.
BBN/SSR/AD-05July14-3:08 pm (BST)