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Basic Bank does not want to merge with City

Bangladesh Bank
Daily Star News

Basic Bank does not want to merge with the private sector City Bank. They want to merge with a government bank. The board of directors of the bank has given an official letter to the government stating this.

Earlier, on April 9, the bank’s officers and employees had given a memorandum to the finance minister and said that they do not want to merge with private banks. Basic Bank is a 100% state-owned commercial bank. They are ‘terrified’ by the news of merging this government bank with a private bank.

The depositors of Basic Bank are terrified by the decision to merge with private banks. Some of them have started withdrawing deposits from Basic Bank. Government institutions are withdrawing more deposits.

Various government institutions and organizations have deposited money in our bank. With the news of merger with private banks, they started withdrawing money.

AM Mofazzal, Managing Director (ongoing charge), BASIc Bank

According to Basi Bank sources, around two thousand crores of deposits were withdrawn from the bank in the five working days before and after the holy Eid-ul-Fitr. Some other institutions have written to the bank to withdraw the deposits. The bank is in a severe liquidity crisis. As a result, the Basic Bank is not able to maintain Cash Deposits (CRR) and Statutory Deposits (SLR) as required by the Central Bank.

According to Basic Bank sources, the amount of deposits in the bank was about 14 thousand crores, which has reduced to 12 thousand crores now. At the end of last December, the disbursed loan of the bank was 12 thousand 868 crores. Of this, defaulted loans are 8 thousand 204 crores or 64 percent.

Basic Bank Managing Director (Acting) AM Mofazzel told Daily Star News, ‘We have been a state-owned bank like Sonali and Janata since 2015. Due to this, various government institutions and organizations have deposited money in our bank. They have started withdrawing money on the news of merger with a private bank. He said that is why the board of directors decided to send a letter to the government to merge with a government bank.

two letters

The board of directors of BASIC Bank decided to write a letter to the government last Wednesday. Then the letter was given. Earlier, Bangladesh Bank spokesperson Majbaul Haque told the media that Basic Bank is not a government bank.

Officials of Basic Bank say that government institutions kept money in the bank considering it a government bank. Major part of the bank’s deposits come from government institutions and organizations. When it was told that it was not a government bank and would be merged with a private bank, government institutions started withdrawing money. Many people withdraw money before and after the holy Eid-ul-Fitr.

In such a situation, two letters were sent by the Board of Directors of Basic Bank to the Financial Institutions Department of the Ministry of Finance. In one of them it is said that it is a 100% government bank. Therefore, merging with private banks will not be right. If you want to merge, you should merge with government banks.

Another letter said that the news of the merger of Basic Bank with the private City Bank has spread panic among the depositors. The bank has sought government assistance for this.

A copy of the letter has also been given to the Governor of Bangladesh Bank. A director of the bank told Daily Star News on condition of anonymity that government institutions are withdrawing deposits. That’s why a letter has been sent asking to change the decision.

Bangladesh Bank has basically asked five banks to merge with five other banks. According to the decision, state-owned BDBL will be merged with Sonali Bank and Rajshahi Krishi Unnayan Bank with Krishi Bank. The process of merging Basic Bank with City Bank, Padma Bank with Exim Bank and National Bank with United Commercial Bank (UCB) is going on. Of these, only EXIM Bank chose Padma Bank earlier to ‘avoid taking over another bank’. Although Bangladesh Bank says, no decision was imposed. Banks themselves have taken this decision.

On April 8, Bangladesh Bank called City Bank Chairman Aziz Al Qaiser and Managing Director (MD) Masrur Arefin and said that the distressed public sector it should be merged with City Bank. Bangladesh Bank Governor Abdur Rauf Talukder and Advisor Abu Farah Md. Nacher was present at this time. Neither side has officially acknowledged the ‘impression’.

Once good bank basics

The 100% state-owned it was once known as a good bank. The journey of this bank started in 1989. The chairman of the bank was the industrial secretary. This practice was abolished in 2009. The chairman is appointed from the private sector. Jatiya Party’s regional leader Sheikh Abdul Hai alias Bachchu was appointed chairman of the bank by the Awami League government, effective 4 October 2009. He was appointed for two periods of five years. He resigned on July 5, 2014, leaving the bank in its worst position in five years.

Since Abdul Hai became the chairman, the bank’s debt kept increasing. He bypassed banking regulations and began issuing large-scale loans under a single authority. The loan default rate of this bank was always below 5 percent. In five years, the bank’s default rate rose to 68 percent.

Abdul Hai was not limited to lending. He also appointed manpower freely without any kind of examination. In 2009, the bank’s workforce was 776 people, in 2014, this number exceeded 2 thousand. Still the workforce is more than 2 thousand. Branches are opened at various unplanned locations due to high manpower.

In the last 10 years, it has incurred a loss of Tk 4,230 crores. Irregularities were also done to the tune of 4.5 thousand crore rupees. As a result,it has suffered losses equivalent to corruption in the last 10 years.

Even though Sheikh Abdul Hai was blamed for the consequences of Basic Bank, the Anti-Corruption Commission (ACC) filed a case accusing him a century after the incident. However, he could not be arrested. There is no visible attempt to arrest.

Bangladesh Bank’s former Chief Economist Mustafa K Mujeri told Daily Star News about this, City Bank and Baeic Bank are going to merge under pressure, it is now proven. All over the world banks are merged with the will of both parties, so that they can become stronger. Bangladesh was seen to follow the opposite process. Such impractical, immature decisions are further weakening the weak basics. Depositors are withdrawing money.

Mustafa K Mujeri also said that banks should be merged within the rules. Otherwise, the effect of BASIC may spread to other banks like a contagion.

 

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