Banks allowed unlimited funding for Padma Bridge

Bangladesh Bank (BB) withdrew on Monday the "single borrower exposure limit" by the commercial banks for financing Padma Bridge project, reports BSS.

"Considering the importance of the Padma Bridge in the country's economy and the priority given by the government, it has been decided that the "single borrower exposure limit" in case of providing bank guarantee by the commercial banks would not be applicable for the Padma Bridge project," the BB said in a circular.

"The circular allows banks to provide guarantee beyond the single borrower exposure limit for financing the country's largest bridge project", a central bank official said.

Earlier on January 16, the central bank capped the single borrower exposure by commercial banks for minimising risks of lending. Under the provisions, the total financing facilities by any bank to any single person or enterprise or organisation of a group should not exceed 35 per cent of the bank's total capital at any point of time.

At the same time, the aggregate outstanding principal amount of funded exposures should not exceed 15 per cent of the capital at any point of time.

However, the single borrower exposure limit for the export sector is 50 per cent of a bank's total capital.