BASIC Bank (Bank of Small Industries and Commerce Bangladesh Limited) a state owned scheduled bank established as a banking company. The bank started its operations on 21 January 1989 with an authorised and paid up capital of Tk 100 million and Tk 80 million respectively. Its authorised capital was raised to Tk 500 million in 1997 and the paid up capital to Tk 240 million in December 2000.
BASIC Bank started as a joint venture enterprise of the BCC Foundation, which had 70% shares. The remaining 30% shares were held by the government of Bangladesh. Following the closure of BCCI (Bank of Credit and Commerce International) and subsequently, of the BCC Foundation, the government of Bangladesh took over 100% ownership of the bank on 4 June 1992.
Up to 1995, it was mandatory for the bank to transfer 50% of its net profit after tax to a capital fund each year. The requirement was reduced to 20% in 1997. The reserve funds of the bank increased from Tk 0.96 million in 1989 to Tk 105.96 million in 1995 and to Tk 397.77 million in 2000. The bank maintained the capital adequacy ratio in accordance with the BIS (Bank for International Settlements) standard adopted in Bangladesh.
The management of the bank is vested in a 6-member board of directors that includes the chairman and the managing director who is also the chief executive. All members of the board of directors are appointed by the government. Two general managers acting under the managing director and nine divisional heads perform day to day operational activities of the bank. At present, the total employee strength of the bank is 417. The bank launched intensive inland training programmes for its staff at both management and non-management levels.
In 2000, BASIC Bank had 25 branches spread in all major industrial and commercial hubs of Bangladesh. Their distribution was 8 in Dhaka city, 5 in Chittagong and one each in Narayanganj, Narsingdi, Rajshahi, Saidpur, Bogra, Khulna, Jessore, Sylhet, Moulvibazar, and Comilla.
Activities of the bank are grouped into industrial credit, commercial credit, and microcredit. Its services are directed towards entrepreneurs in the small industry sector. Short-term trade related loans and other non-fund businesses get special attention in the bank. It offers services to exporters and importers. All 25 branches of the bank receive deposits in current and savings accounts and also provide facilities for term deposits.
The bank's total volume of foreign exchange transaction grew from Tk 296.41 million in 1989 to Tk 19,372.2 million in 1999. The import and export finance by the bank in 1999 were Tk 7,391 million and Tk 5,060 million respectively. The bank has correspondent relationships with 18 banks/bank offices abroad. The bank is a member of SWIFT (Society for Worldwide Interbank Financial Telecommunications); this paved the way for it to achieve uninterrupted connectivity in foreign exchange business and fund transfer.
The bank started its banking operations in 1989 with initial deposits of Tk 313.88 million; this rose to Tk 5,768.9 million in 2000. The deposit-mix of the bank comprised savings, fixed, current, short-term, and current deposits and other contingency accounts. The credit-deposits ratio at the end of 2000 was recorded at 80%. Gross loans and advances of the bank were Tk 4,618.7 million in December 2000, when its classified (non-performing) loans stood at Tk 172.5 million and the total provisions made against classified loans amounted to Tk 162.6 million.
During 1999-2000, the bank received 73 loan proposals but approved loans to 51, of which 37 were in operation and 14 projects were at different stages of implementation. Since inception the bank had provided term loans for more than 245 projects providing employment to a total of 10,258 persons. The recovery rate of project loans of the bank was 87% in 1999. Total outstanding loan provided by the bank to projects in trade, business and other commercial activities on 31 December 1999 stood at Tk 1,344 million. At the end of 1999, total outstanding balance in respect of the bank's micro-credit was Tk 104 million, benefiting approximately 40,000 poor people. The recovery rate for micro-credit during this period registered at 97%.
As at the end of 2000, the total investment of the bank amounted to Tk 1,074.18 million and was concentrated mainly in treasury bills (48%) and investment bonds (41%). Debentures, shares and prize bonds accounted for 11%. At the end of 1989, the anticipating year of its operation, the BASIC Bank's total assets amounted to Tk 631.19 million, but the value of its assets grew to Tk 10,857.9 million in 2000. Loans and advances comprised 54% of the assets portfolio. Liquid cash and balance with other banks were 14% and 13% respectively. Investment in securities claimed 10%. The bank's off-balance sheet assets stood at Tk 3,127.1 million in December 2000.
The bank has several sources of long term funds specially
for financing development-banking activities. It avails a credit line
facility of KFW, a German Development Bank for financing microcredit scheme
and small-scale industries. Another source of its borrowing is the bangladesh
bank. Total outstanding amount against utilisation of funds
from the above sources during 1999- 2000 was Tk 369 million. In 2000,
the total income of the bank was Tk 877.5 million (including net interest
income of Tk 265.8 million) and the total expenditure was Tk 555.7 million.
The after-tax return on average assets of the bank in that year was 4.16%
and return on equity was 42.15%. From the very inception, the bank has
been posting profit and income tax to the government. The cumulative figure
of contribution to the exchequer up to December 1999 amounted to Tk 425
million, which is more than the bank's paid up capital. [S M Mahfuzur