Basic Bank is a very good example of a how a well-functioning public bank can be turned into a non-functioning unit by unscrupulous self-serving people. The scam-ridden BASIC bank has just been given a new lease in life with fresh capital infusion of Tk 1,000 crore. It has so far received Tk 3,390 crore for recapitalisation. The taxpayers have the right to know why money is being put into a bank that is progressively going downhill. Bailing out a government bank without removing the major internal defects and bringing back discipline in the management will mean the more of the same – further waste of public money.
The bank has been in the headlines since 2010, and particularly in 2013 when it approved loans of Tk 4,500 crore, mostly without proper documents and scrutiny. Reportedly, the bank’s board and top management were found to have helped the scam. We are not aware if any action has been taken on the Bangladesh Bank’s recommendation against the board. As such one may ask why more of taxpayers’ money is being thrown in to bolster a bank with a record of poor performance without ensuring necessary remedial measures of its management.
We feel allowing for fresh infusion of capital using taxpayers’ money is injudicious. The unconditional recapitalisation of badly managed banks, we believe, is sending the wrong signal to a sector that has been rocked repeatedly by scams. It is imperative that there is an internal reform in the bank that will restore the discipline in loan disbursement without which the move for recapitalisation is bound to be a total waste of taxpayers’ money. And those responsible for the bank’s current state should also be held to account.