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The regulators concerned have asked the top management of BASIC Bank Limited for taking effective measures, including boosting loan recovery drives, immediately to improve its overall performance, officials said.
The instruction was given at a special meeting of BASIC Bank management and Financial Institutions Division (FID) under Ministry of Finance, held at Bangladesh Bank (BB) headquarters in the capital on Sunday.
BB Governor Fazle Kabir presided over the high-level meeting.
Among others, FID Secretary Ashadul Islam, BB's Banking Reform Advisor S K Sur Chowdhury, and BASIC Bank Chairman Alauddin A Majid and its former managing director Muhammad Awal Khan attended the meeting.
"We've asked the BASIC Bank management to improve the bank's overall performance through various measures, including strengthening loan recovery drives," a senior official told the FE.
He also said the meeting also asked the BASIC Bank top management to gradually reduce its capital shortfall by improving financial health.
The regulator's latest measures came against the backdrop of a rising trend in capital shortfall of the scam-hit state-owned bank recently.
The capital shortfall of BASIC Bank rose to Tk 31.06 billion as on June 30 last in line with the Basel-III standard, from Tk 26.56 billion nine months ago. It was Tk 31.07 billion in March, according to BB statistics.
Bangladesh started implementing Basel-III for calculation of capital-to-risk weighted assets ratio (CRAR) of all banks from first quarter (Q1) of 2015 for ensuring stability in the banking sector.
When contacted, a senior official of BASIC Bank told the FE that the top management will immediately set targets for 2019 to improve its overall financial health.
Sources also said the central bank in the meeting agreed to relax its procedures to help appoint a new MD for the public sector bank.
A fresh proposal for appointing a new MD will be placed in the next meeting of BASIC Bank board of directors, they added.
BB earlier found different types of irregularities in BASIC Bank in giving loans, which included non-verification of customers' creditworthiness, absence of maintaining 'know your customer (KYC)' procedures, and extending loans to defaulters.
The central bank's investigations detected financial irregularities involving around Tk 45 billion loans in the bank's three branches - Gulshan, Dilkusha and Shantinagar - between 2009 and 2013.
The overall financial health of BASIC Bank is yet to improve significantly despite taking different measures by the authorities concerned, they added.