BASIC Bank seeks low-cost deposits to cut funding expenses

State-owned BASIC Bank has sought government approval to open and operate accounts of government and donor-funded projects as part of efforts to strengthen its deposit base, lower funding costs and improve its overall financial health, sources said.
In a recent letter to the Finance Ministry, Deputy Managing Director Abu Md Mofazzal requested the authorities to take necessary steps to allow the bank to manage such accounts.
The letter said that the problem-ridden bank's reliance on high-interest-bearing deposits remains a major challenge. It cannot achieve its desired level of profitability due to a large volume of classified loans and high-cost deposits, which have resulted in a relatively high cost of funds.
According to the letter, BASIC Bank has already submitted a time-bound recovery plan to the Financial Institutions Division (FID) and Bangladesh Bank. As part of the plan, the bank has intensified efforts to attract low-cost and zero-interest deposits.
At present, government and donor-funded project accounts are mainly maintained by state-owned banks and financial institutions, including Sonali Bank, Janata Bank, Agrani Bank and House Building Finance Corporation.
Such institutions generally enjoy a lower cost of funds because of their access to low-cost and non-interest-bearing deposits, which positively affects their financial performance.
BASIC Bank argued that allowing it to operate government and donor-funded project accounts would significantly reduce its cost of funds and help transform it into a profitable institution.
The bank also claimed that it has made progress in its turnaround efforts with government support.
According to the letter, the number of accounts maintained by the bank reached 48,740 as of December 2025 and has been increasing steadily.
The bank currently has an authorised capital of Tk 55 billion and a paid-up capital of Tk 10.85 billion.
BASIC Bank's financial troubles date back to the tenure of former chairman Sheikh Abdul Hye Bachchu, who was appointed in September 2009 for a three-year term and later received a two-year extension in 2012.
According to sources, the bank's performance deteriorated sharply during his tenure as he and several board members allegedly engaged in "gross irregularities in sanctioning loans in violation of rules and regulations of Bank Company Act". The government dissolved the bank's board in 2014.
Bangladesh Bank investigations found that around Tk 35 billion in loans had been illegally disbursed through the bank's Gulshan, Dilkusha and Shantinagar branches between 2009 and 2011.
BASIC Bank is currently implementing a three-year action plan aimed at reducing its large stock of non-performing loans to a manageable level through a range of recovery and reform measures.
When contacted, a Finance Ministry official said, "We have recently received the proposal regarding opening government and donor-funded project accounts with BASIC Bank and are examining the matter."

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