Bangladesh: BASIC Bank board dissolved

Dhaka, July 7, 2014 (New Age): The government on Sunday dissolved the board of directors of the state-owned Bangladesh Small Industries and Commerce Bank Limited where several thousand crore takas had been misappropriated through the approval of ‘shady’ loans. Meanwhile, current Bangladesh Krishi Bank chairman Alauddin A Majid was appointed new chairman of the bank after controversial chairman Sheikh Abdul Hai Bachchu resigned from the post a couple of days ago, following widespread criticism. Majid, also a former managing director of BASIC Bank, was relieved of his position in the Krishi Bank at the same time. The banks and financial institutions division under the finance ministry issued two notifications in this regard on Sunday. The division also issued another notification accepting Abdul Hai Bachchu’s resignation. Officials said the division had selected six people as new directors of the BASIC Bank. They are former deputy managing director of Commerce Bank Mohammad Asaduzzaman, Hasan Mahmood FCA, former managing director of Bangladesh House Building Finance Corporation Raihana Anisa Yusuf, Dhaka University Professor Mujib Ahmed, Industries ministry additional secretary Begum Parag and banks and financial institutions division joint secretary Mamun Al Rashid. They will be appointed after the Bangladesh Bank gives clearance to their credit record. Banks and financial institutions division secretary M Aslam Alam said they will introduce performance criteria for board of directors in state-owned banks to avert loan scams in the future. The proposed system will be introduced with the new board of directors of the BASIC Bank. BB had detected anomalies worth more than Tk 4,500 crore and urged the finance ministry to dissolve the BASIC Bank board of directors a couple of months ago. The finance ministry had been dillydallying on taking a firm decision on the loan scam in the BASIC Bank – a specialised bank once touted as one of the best-run public sector banks – first detected in November 2012. Abdul Hai, who was appointed chairman in 2009, was rewarded reappointment in 2012. Muhith said on Saturday Abdul Hai would be brought to book if found guilty. Earlier on May 25, the Bangladesh Bank had fired BASIC Bank managing director Kazi Faqurul Islam for his involvement in the loan scam. The default loans of BASIC Bank soared to Tk 2,557 crore last March from Tk 1,417 crore in February. The central bank signed a memorandum of understanding with the bank last July in a desperate bid to bring discipline.  BASIC Bank, however, failed to comply with the MoU.