BASIC Bank board of directors dissolved

The government dissolved Sunday the board of directors of the scam-stricken BASIC Bank and appointed Alauddin A Majid as its new chairman to replace Sheikh Abdul Hye Bacchu, who made an unceremonious exit.

Officials said the bank and financial institutions division (BFID) of the ministry of finance (MoF) executed the shakeup after having accepted the resignation letter of Mr Bacchu, who tendered his resignation to the ministry Friday.

The MoF issued Sunday separate circulars on the bank-management overhaul. Mr Alauddin A Majid, a former managing director of the BASIC Bank was the immediate past chairman of the Bangladesh Krishi Bank (BKB).

After dissolving the bank board, the MoF decided to appoint seven new directors for the BASIC bank, officials said. A list of possible directors has already been sent to the Bangladesh Bank for its clearance. They include Professor Mujib Ahmed of the University of Dhaka, Begum Parag, additional secretary of the ministry of industries, and Md. Mamun-al-Rashid, joint secretary of BFID.    

"According to section 46(6) of the Banking Companies Act 1991, we have accepted the resignation letter of Abdul Hye Bacchu and then abolished the board of directors of the BASIC. Another circular was issued regarding Alauddin A Majid's appointment," BFID secretary Dr. M Aslam Alam told the FE.

Mr Aslam said: "We have already proposed a list of directors for the BASIC Bank to the BB for its nod. After central bank's clearance, we'll issue a separate circular regarding the appointment of new directors."

Responding to a query, Mr Aslam said: "If necessary, the new board will further audit thoroughly all the branches of BASIC Bank, and then take necessary step if any irregularities are found."

He said they conducted a functional audit on its Dilkusha, Shantinagar and Gulshan branches and found many irregularities. "Then we sent the reports to the central bank, seeking its advice, and the BB advised us to dissolve the board."  

To another query he said, "The BB and the new board directors will do everything possible for getting back the money that has been taken away from the bank."

If necessary, they can go to the Anti-corruption Commission (ACC) or file cases with the Artha Rin Adalat. This was the step followed in the case of Sonali Bank and Hall-Mark scam.

The present board of Sonali filed cases against Hall-Mark group with the Artha Rin Adalat and the ACC also investigated and filed separate cases against the graft suspects in Hall-Mark and officials of Sonali Bank," he said, in an indication of the course the law should take in the case of BASIC.

The BFID secretary also said: "Earlier, we had empowered the board, but they failed to show their accountability. Now the MoF is going to monitor the performance of the board."

He said they would sign 'performance contract' with all the state-owned banks. It will begin with the BASIC Bank. The chairman and the managing director will sign the contract on behalf of the board. "We will monitor and evaluate their performance on quarterly basis, with assistance of the central bank."

The latest government move has come following a central bank's recommendation 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 took 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.

The central bank made the recommendation after it had found different types of irregularities in the BASIC Bank in disbursing loans. The malpractices include non-verification of customer's creditworthiness, absence of 'know-your-customer (KYC)' procedures, and fresh lending to defaulters.

The BB investigations also unearthed financial irregularities involving around Tk 45 billion of loans in the three branches located at Gulshan, Dilkusha and Shantinagar in Dhaka between 2009 and 2013.