Bangladesh Bank urges lenders to restructure City Group’s Tk26,000cr debt

Bangladesh Bank has advised lenders to restructure and reschedule around Tk26,000 crore in loans owed by City Group, one of the country’s leading industrial conglomerates, to help keep its business operations running.

The central bank has recommended that the loans not be classified as defaulted for the time being, allowing the group to continue its operations and recover from its current financial difficulties. City Group owes the money to 47 domestic and foreign banks and financial institutions.

The advice was given at a tripartite meeting at Bangladesh Bank on Sunday (26 October) morning, attended by Governor Md Mostaqur Rahman, Deputy Governors Kabir Ahmed and Sarwar Hossain, senior executives of several lending banks and City Group Managing Director Mohammad Hasan.

Several banks had recently moved to classify City Group’s loans as defaulted and initiate legal action to recover the money. Bangladesh Bank had previously directed lenders not to classify the loans as defaulted until September. After that deadline expired, several banks proceeded to classify the loans accordingly.

Central bank sources said that once a borrower is classified as a defaulter by one bank, securing further credit facilities from other banks becomes difficult. This could further aggravate City Group’s financial difficulties and threaten its business operations.

Against this backdrop, Bangladesh Bank advised lenders at Sunday’s meeting against taking any steps that could force the group to shut down its operations. It also suggested offering long-term loan restructuring and rescheduling facilities, if necessary.

Read More

Businesses pin investment hopes on govt’s 3R strategy

Representatives of the lending banks included City Bank Managing Director Masrur Arefin, Mutual Trust Bank Managing Director Syed Mahbubur Rahman, Bank Asia Managing Director Sohel R K Hussain, BRAC Bank Managing Director Tareq Refat Ullah Khan, Prime Bank Managing Director Faisal Rahman, Eastern Bank Managing Director Hasan O Rashid, Pubali Bank Managing Director Mohammad Ali and Southeast Bank Managing Director Khalid Mahmud Khan, among others.

Syed Mahbubur Rahman said City Group had never previously defaulted on its loans and faced no allegations.

“Everyone wants the group to overcome its current crisis and recover. The central bank has also advised banks against taking decisions that could worsen the group’s situation,” he said.