Bank borrowing crosses Tk 10,000cr

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Government borrowing from commercial banks crossed Tk 10,000 crore early this month while the government has paid Tk 7,465 crore liabilities of Bangladesh Petroleum Corporation (BPC) to Sonali and Janata banks in bonds.

Sources said government borrowing from commercial banks stood at Tk 10,265 crore on October 7.

However, the net borrowing from the banking system on the same day was Tk 8,689 crore as Tk 1,576 crore was repaid to the central bank on the same day.

Bangladesh Bank (BB) officials said the actual borrowing figure in terms of cash is not too much as most of the borrowing has been done in a non-cash way.

“If we deduct the bond money of October 7, the actual figure of bank borrowing stands at Tk 1,224 crore,” an official of the central bank said referring to budgetary target of bank borrowing for this fiscal, which is Tk 7,253 crore.

Banking sources said the government has paid Tk 4,965 crore to Sonali Bank and the rest Tk 2,500 crore to Janata Bank in bonds as BPC liabilities.

The government would pay against the bonds in a period of 15 years with five percent interest rate, said one source.

That means Tk 900 crore to Tk 1,200 crore, which includes both principal amount and interest, would have to be paid each year to the banks, finance ministry sources said.

The current budget for the first time has allocated Tk 7,523 crore to repay BPC liabilities to the NCBs as non-cash bonds.

Officials of both the finance division and commercial banks have apprehended more borrowing by the government from the banking sector, especially to repay BPC liabilities, if the government does not adjust increasing price of petroleum products.

The central bank being instructed by the government has decided to give $300 million, $100 million each to three NCBs, to purchase oil for the BPC. The money will be given as overdraft. If the BPC fails to pay the amount to the banks, the BB will realise the amount from the NCBs.

BPC’s liabilities to the NCBs will increase more if it fails to repay the money on time, an official said.

The government last time readjusted oil prices in April this year.

Since then the international market has been witnessing an increasing trend. Per barrel oil price is now around $88 which was $70 during the beginning of the current fiscal, according to a BB official.

The BPC is currently facing about Tk 300 crore loss a month.

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