In a sensational move, BASIC Bank has slashed the salary of its employees for chronic losses, setting a precedent in Bangladeshi’s banking sector of linking performance to remuneration.

The decision was taken by the state bank’s board on Sunday as part of its austerity measures and immediately issued a notice to inform the employees that their salary would be fixed as per the structure followed by other public banks.

“The bank has been facing losses for the last seven years. Against the backdrop, the lender is unable to bear additional salary and allowance,” read the notice.

Subsequently, more than two hundred of its aggrieved employees staged demonstration at the bank’s head office in the capital, demanding reinstatement of the previous salary structure. They also confined its Managing Director Md Rafiqul Alam at his office all day.

The bank has been following a special wage structure since its inception in 1989 that provided better pay package to its employees than other state-run lenders, said an official of the bank.

Besides, the bank also revised the salary structure in February 2013 to increase the wages once again.

“No bank in the history of Bangladesh has slashed its employees’ salary,” said a former managing director of a state-run bank who recently retired after 37 years in service. 

Since the bank is in crisis, the salary cut is fair, said Khondkar Ibrahim Khaled, a former deputy governor of the Bangladesh Bank.

“When hundreds of crores of taka was plundered from the bank the employees did nothing,” he added.

At BASIC an officer draws gross salary of about Tk 40,000, whereas the other state-run banks’ officers get Tk 30,000. 

A senior officer at BASIC enjoys a gross amount of about Tk 50,000, when the same category officer in other state-run banks get Tk 40,000. 

One of the best performing banks until 2009, things took a turn for the worst when the present government came to power and appointed Abdul Hye Bacchu as its chairman.

Bacchu siphoned off more than Tk 4,500 crore from the bank between 2010 and 2013 in collaboration with a section of high officials and board members. Defaulted loans in the bank escalated in recent years, forcing the lender to face a large amount of provisioning shortfall as well.

The bank has also faced capital shortfall in recent years, which compelled the government to inject funds to rescue it.

Alauddin A Majid, chairman of BASIC Bank, told The Daily Star that the agitation carried out by the employees is quite illogical as the bank has adjusted its salary structure in line with other state lenders.

“The bank has been facing losses for the last seven to eight years. So how is it possible to pay a larger salary than the other state-run banks?” 

As of September this year, default loans in BASIC stood at Tk 8,738 crore, which is 58.62 percent of its outstanding loans.

Another BASIC Bank official said that the demonstrators withdrew their programme at 6.30pm when the management of the bank assured them of reconsidering their demand at the next board meeting.

“Only a fraction of the people are involved in scams, so why should we bear the brunt? The latest decision will have an adverse impact on our lifestyle. We will face difficulties in managing our expenses.” 

Majid, however, said the new salary scale will affect the deputy general managers and above; from assistant general managers and below it is not much different.