BB grants special loan concessions to two defaulting Beximco firms

The Bangladesh Bank (BB) has granted special regulatory concessions to two loan-defaulting companies of Beximco Group to help them continue normal business operations.
The companies are Beximco LPG Unit-1, a borrower of National Bank, and Shinepukur Ceramics, a borrower of state-owned Sonali Bank.
The central bank issued two separate circulars on Monday, relaxing restrictions under the Bank Company Act to allow the companies to access specified banking facilities despite their default status.
According to the circular concerning Beximco LPG Unit-1, the restriction under Section 27 Ka-Ka (3) of the Bank Company Act will be relaxed for opening letters of credit against 100% margin and providing working capital facilities to the company until 31 December 2027.
Under Section 27 Ka-Ka (3) of the Bank Company Act, 1991, banks and financial institutions cannot provide credit facilities to borrowers classified as loan defaulters.
As a result of this restriction, Beximco LPG Unit-1 had been unable to obtain credit facilities from banks and financial institutions, making it difficult for the company to continue its business operations.

BB has now granted an exemption from the provision, subject to specific conditions.
The circular states that neither the government nor BB will bear any liability arising from the new credit facilities extended to the defaulting company. National Bank will not be entitled to claim any financial assistance from the government or the central bank in the future in connection with these facilities.
The company will also be required to deposit all its income into a designated bank account to qualify for the new facilities. Payments to National Bank against its outstanding loans must be made regularly and proportionately from the income deposited in the account.
A similar concession has been granted to Shinepukur Ceramics, which is a loan defaulter of state-owned Sonali Bank.
BB said the legal restriction would be relaxed to allow renewal of the company’s existing working capital limit of Tk105 crore despite its default status.
The central bank said the concession had been granted in the interest of the state.
However, Shinepukur Ceramics will have to comply with conditions similar to those imposed on Beximco LPG Unit-1 to receive the renewed credit facilities.
The regulator has informed the managing directors and chief executive officers of all banks about the regulatory exemptions granted to the two Beximco Group companies through separate letters.