Two Beximco firms get BB lifeline to keep business going

The Bangladesh Bank (BB) has relaxed lending restrictions for two loan-defaulting companies of the Beximco Group to help them maintain regular business operations.

The central bank issued two separate circulars yesterday, granting exemptions to Beximco LPG Unit-1 and Shinepukur Ceramics.

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On condition of anonymity, a senior central bank official told The Daily Star yesterday that the facilities have been provided to the firms so that they can keep their regular businesses running.

Under the exemption for Beximco LPG Unit-1, the company will be allowed to open letters of credit (LCs) against 100 percent cash margins and receive working capital financing, despite being a loan defaulter to National Bank.

The relaxation of the restrictions will remain in force until December 31, 2027.

Section 27KaKa(3) of the Bank Company Act bars banks and financial institutions from providing any form of credit facility to loan defaulters.

As a result, Beximco LPG Unit-1 could not obtain credit from banks or financial institutions, making it difficult for the company to continue its operations.

The central bank has now relaxed the restriction for the company, subject to several conditions. The conditions include that the government and the central bank will bear no liability for the new credit facilities.

Besides, National Bank will not be able to claim any financial assistance from the government or the Bangladesh Bank in the future in connection with these facilities.

To qualify for the new credit facilities, Beximco LPG Unit-1 must deposit all its income into a designated bank account. It must then use that income to repay its dues to National Bank regularly on a proportional basis, according to the central bank circular.

A similar exemption has been granted to Shinepukur Ceramics, which has defaulted on loans from state-owned Sonali Bank.

The Bangladesh Bank said the legal restriction would be relaxed to allow the renewal of the company’s existing working capital limit of Tk 105 crore, despite its loan-default status. The central bank said the concession has been provided in the public interest.

Shinepukur Ceramics will also have to meet conditions similar to those imposed on Beximco LPG Unit-1 to receive the renewed credit facility.

The Bangladesh Bank informed the managing directors and chief executive officers of all banks about the legal exemptions granted to the two Beximco companies.