Govt rule ignored to waive Tk 101cr loans

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The finance ministry in violation of a government rule has asked five state-owned banks to waive Tk 101 crore loans taken by 16 frozen food exporters.

However, the banks– Sonali, Janata, Agrani, Rupali and Krishi– have not complied with the ministry’s instructions yet as they found the order clashes with a rule issued last year by the finance ministry itself.

In June, the finance ministry in a letter conveyed a government decision to the banks about the loans taken by the frozen food exporters, who owe Tk 126 crore to the banks.

The ministry said the defaulters would repay Tk 25.20 crore and 40 percent of the loan equivalent to Tk 50.40 crore will have to be waived by the banks “as per law”.

The government will pay back the remaining Tk 50.40 crore by issuing bonds, the letter added.

The ministry argued that the exporters belong to a thrust sector and suffered a huge loss due to price reduction in international market, cyclones, tidal waves, viral attacks on shrimps and political disturbance.

Meanwhile, the banks did not implement the decision yet, as according to a finance ministry rule, a bank cannot waive the principal amount of a loan and the cost of fund.

“Of the total loan, more than Tk 100 crore is principal amount,” said a banker adding, “Therefore the banks cannot waive the loan as per the law.”

This prompted the banks to hold a meeting with the finance ministry in July. The bank executives told the finance secretary that they can waive the loans if the letter deleted the words “as per law”.

During the meeting, the finance secretary asked the banks to submit the loans’ status to the ministry.

“The owner of the banks is the government. If the government waives a loan, we have nothing to say other than that the banks will swallow the losses. And this will prompt other thrust sectors to seek the same type of waiver,” viewed a high official of a bank.

Sources said the bankers had protested the move to the finance ministry before the government conveyed its decision to them.

“The government in the past had made the banks waive loans promising that it would subsidise the losses. But in reality, the government never fulfilled its promises,” a banker said.

Of the 16 defaulters, four belong to the Sonali Bank. They are Bangladesh Seafood Ltd (Tk 6.45 crore), Lockpur Fish Processing Co (Tk 18.18 crore), Star Seafood Ind (Tk 5.32 crore) and Coastal Seafood Ltd (Tk 8.90 crore).

Bangladesh Krishi Bank is dealing with four defaulters. They are Amin Fish Farms and Industries (Tk 10.51 crore), Frozen Food Ltd (Tk 10.56 crore), Bangladesh Frozen Fish and Frog legs Ltd (Tk 1.27 crore) and Sundarban Sea Food Industry (Tk 3.09 crore).

Five exporters– Conception Seafood (Tk 12.42 crore), International Frozen Ltd (Tk 0.39 crore), International Sea Food Ltd (Tk 7.36 crore), Mahi Fish Processing Ltd (Tk 22.27 crore) and Satkhira Foods Ltd (Tk 7 crore)– are defaulters of Agrani Bank.

Aqua Foods Ltd (Tk 7.38 crore) and Bionic Seafood Export (Tk 0.45 crore) are two defaulters of Rupali Bank.

Janata Bank is dealing with a Tk 4.44 crore loan against Prince Sea Foods.

While the finance ministry is so accommodative about waiving large-scale loans, a few weeks ago an 85-year old poor farmer in Nilphamari was being taken to jail for not being able to pay back his paltry bank loan of Tk 9,000.

The army chief later paid off the loan to free the farmer.

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