Meghna Group fails to secure $80 million loan from IFC after BB rejection

The Meghna Group of Industries (MGI) has failed to secure $80 million loan support from the International Finance Corporation, one of the five institutions under the World Bank Group, after the Bangladesh Bank refused to issue a non-objection certificate or NOC.

The Modhumoti Bank PLC applied for securing the NOC on behalf of MGI, according to media reports. The loan was intended for the purchase of four ships.

The Bangladesh Bank rejected the application citing concerns that should MGI fail to repay the loan, the debt burden would fall on the central bank and the nation as a whole.

Bangladesh Bank Spokesperson Arif Hossain Khan told an English daily that the central bank welcomes it if a private company draws foreign direct or portfolio investments. However, when it comes to foreign loans, typically priced in US dollars, the central bank does not give approval always.

Furthermore, if the company fails to use a foreign loan for boosting exports, no new foreign currency is created, and pressure is piled on the country’s existing foreign currency reserve to repay the loan, Arif Hossain Khan noted.

However, MGI Chairman and Managing Director Mostafa Kamal told the English daily that the central bank showed no reason when declining to issue NOC.

The group also has sufficient sources for earning foreign currencies and repay the loan, Mostafa Kamal added, noting that despite this the central bank rejected its offer.

The group currently operates 145 ships, including 110 vessels it owns.