BASIC Bank chair quits

Chairman of BASIC Bank Sheikh Abdul Hye Bacchu eventually stood down following allegations of financial irregularities involving Tk 45 billion in the state-owned bank's lending operations.
He submitted Friday his resignation to Finance Minister AMA Muhith at his Minto Road residence in the capital.
Talking to reporters at the secretariat Saturday, the finance minister said investigation will be conducted against all accused persons, including Mr Bacchu. "If they are found guilty, they will be brought to book."
The minister also said the Bank and Financial Institutions Division of the Finance Ministry will appoint a new chairman for the BASIC Bank today (Sunday). He wouldn’t name his name.
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.
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 Tk 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 BB official told the FE.
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 governing bank 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.  
BSS adds: The government would soon reshuffle the board of directors of state-owned commercial and specialized banks, Finance Minister AMA Muhith said on Saturday.
Of the eight state-owned banks, Sonali Bank, Agrani Bank, Janata Bank and Rupali Bank are commercial banks and the rest four are specialised public banks. These are: BASIC Bank, Bangladesh Development Bank, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank.
The minister did not specify whether all the eight state-owned banks would see new board of directors soon.
He said this new government, reelected through the January 5 election, would reorganize the board of directors of the state-owned banks to streamline the activities of public banks and establish more discipline and transparency in the banking sector.
The minister, however, said it was hard to identify the proper persons for reorganising the board of directors of banks.
The finance minister was responding to queries from journalists who gathered at his secretariat office to know about the resignation of BASIC Bank chairman Mr Bachchu.
Mr Bachchu submitted his resignation to the finance minister at his residence on Friday against the backdrop of allegations of corruption, irregularities and misappropriation of funds by the board of directors of the specialised bank.