BASIC Bank Seeks Government Funding to Cut Costs

BASIC Bank, a state-owned financial institution, has formally petitioned the government for authorization to manage the accounts of public sector and donor-funded development projects. The initiative is intended to broaden the bank’s deposit base, depress its interest expenses, and improve its long-term financial performance.

In a formal letter addressed to the Ministry of Finance, the bank’s Deputy Managing Director, Abu Md Mofazzal, requested that administrative procedures be initiated to grant the bank clearing privileges for these zero-cost and low-interest accounts.

High Liability Expenses Limit Turnaround Efforts

The bank’s leadership emphasized that a major hurdle to its ongoing restructuring is its structural reliance on high-interest-bearing deposits. The bank stated that achieving commercial profitability remains exceptionally difficult because it is burdened by a vast volume of classified loans alongside these high-cost liabilities, which collectively inflate its baseline cost of funds.

To address these financial imbalances, BASIC Bank has filed a structured, time-bound recovery plan with the central bank, Bangladesh Bank, and the Financial Institutions Division (FID). A core objective of this strategic roadmap is to aggressively pursue low-cost and non-interest-bearing institutional deposits.

Presently, public sector accounts and donor-funded project finances are predominantly managed by other major state-owned commercial banks and specialised financial institutions. These entities leverage their access to non-interest-bearing public funds to maintain a highly competitive cost of funds, directly boosting their financial performance.

Comparative Institutional Access and BASIC Bank Capital Framework

The table below presents the primary public sector institutions historically entrusted with government project accounts alongside the current financial capital position of BASIC Bank:

Legacy Irregularities and Strategic Restructuring

BASIC Bank argued that securing access to these project accounts would drastically compress its interest expenses and accelerate its transition toward commercial viability. The management further asserted that, backed by state assistance, the bank has already achieved steady operational growth, with its total active customer accounts reaching 48,740 by December 2025.

The institutional decay of BASIC Bank tracks back to the tenure of its former chairman, Sheikh Abdul Hye Bachchu, who assumed leadership in September 2009 for a three-year term and subsequently secured a two-year extension in 2012. Central bank investigations later revealed that Bachchu and several board members engaged in gross irregularities by approving massive credit facilities in direct violation of the rules and regulations of the Bank Company Act. The government ultimately dissolved the board of directors in 2014.

According to Bangladesh Bank findings, approximately 35 billion Taka in fraudulent loans was illegally disbursed between 2009 and 2011, primarily out of the bank’s Gulshan, Dilkusha, and Shantinagar branches. To remediate this legacy portfolio, BASIC Bank is presently executing a comprehensive three-year action plan targeted at reducing its non-performing loans through aggressive recovery drives and compliance reforms.

A senior official within the Ministry of Finance confirmed receipt of the bank’s deposit proposal, stating that the ministry is currently examining the feasibility of the request.