The top managers of the beleaguered state-owned BASIC Bank reportedly have turned out to be very considerate in view of the bank's deplorable state of financial health.
The officials -- six deputy managing directors (DMDs) and 12 general managers (GMs), according to a newspaper report, have voluntarily decided to trim their monthly compensation package in a bid to minimize the bank's operating cost.
The DMDs have decided to keep aside temporarily Tk. 30000 each from their gross salary and the GMs Tk. 20000 each. The amount, as the newspaper report said, will be kept in deposit pension scheme accounts of the bank and if the bank makes profit again by 2016, the amount would be paid back to the officials concerned, of course, with accrued and accumulated interest earnings.
While appreciating the 'gesture' shown by the officials, one might tend to take exception to the existence of so many DMDs and GMs of a bank that has only 62 branches. In fact there was an astronomical rise in the number of branches between the years 2011 and 2013.
The number of BASIC Bank branches was 31 in 2007, 34 in 2010 and 45 in 2011. In the year 2013, the number of branches had shot up to 68. The number of employees which was 721 in 2007 had risen to nearly 1700 in 2012. Even such an increase does not justify the appointment of so many top officials.
Moreover, the magnanimity being displayed by the officials concerned might be viewed as an act akin to Bengali adage 'Gacher gora kete agae pani deya' (watering the top of a plant after cutting it down from the very root). However, the blame, naturally, should not be directed towards those who have recently been inducted into the top management positions of the bank.
The top officials cannot disclaim their involvement in the developments concerning the financial health of the bank. In fact, they have been a party to the deliberate attempt to deface the bank that until 2009 was the best-run state-owned bank. Instead of making attempts to stemming the rot, these officials have either been onlookers or active participants in the acts that had contributed to the decline of the bank.
For instance, the according to the financial statement prepared by the bank management, the BASIC Bank suffered a net loss of Tk. 530 million in the year 2013. But the audit firm detected the concealment of a substantial amount of loss -- over Tk. 2.0 billion.
The CA firm said that the bank has credited interest on classified loans, amounting to more than Tk.2.0 billion, to income head instead of crediting the same to interest suspense account. The action was made in contravention of the relevant Bangladesh Bank circulars. So, the net loss of the BASIC Bank in 2013 was Tk. 2.6 billion and negative capital, Tk. 3.15 billion.
The bank management had reported 'provision shortfall' at Tk. 1.26 billion as on December 31, 2013. But Bangladesh Bank (BB) detected another provision shortfall amounting to Tk. 6.62 billion and the audit firm revealed additional shortfall to the tune of Tk. 5.43 billion.
As of December 31, 2013, the bank had classified loans worth Tk. 31.45 billion. Nearly 57 per cent of the amount was adjudged as 'bad'.
However, in view of the precarious financial health of the bank, the central bank by an order issued in April last had allowed its management to provide the entire amount within December 31, in the current calendar year.
The audit firm also reported significant weakness in the bank's 'internal control regarding loans and advances management'. It said loans were renewed having excess over-limit and grace periods were extended to borrowers frequently to avoid classification of loan. The head office of the bank allegedly issued 'incomplete' sanction advice and decreased instalment size beyond rules. Moreover the auditors detected overvaluation of collaterals and use of the same collateral in multiple loan cases.
The irregularities that have been unearthed in the BASIC Bank until now had not been indulged in solely by the errant board members, if there was any. The top officials being a part of the decision-making process were a party to those.
Moreover when the bank was in severe financial difficulties in 2013 because of a substantial volume of loans becoming classified, the senior executives had taken loans amounting to Tk.140 million. These officials until December 31, 2013 owed Tk.920 million to the bank. Bankers are allowed to borrow from their respective banks at discounted rates of interest.
© 2024 - All Rights with The Financial Express
