BB asks banks to follow certain conditions

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FE Report
The Bangladesh Bank (BB) has asked the commercial banks concerned to implement an official decision that sets certain conditions on recovery of outstanding credit from private jute millers to help them continue production, sources said.
Under the conditions, the arrear loans along with five-year interest until June 30, 2009 that the private jute mills owe to different commercial banks will be kept in a 'block account' for 30 months and later the debt should be recovered in 10 years with charging of an interest rate of 8.0 per cent.
"You are requested to recover the arrear loans from private jute mills in 10 years at an interest rate of 8.0 per cent after keeping the outstanding loans along with five-year interest in a block account," said a BB circular issued Tuesday.
The central bank's circular came in line with the recent instruction of the finance ministry in this respect, official sources said.
Earlier, a meeting between Textile and Jute Minister Abdul Latif Siddiqui and the bankers agreed to recover the outstanding loans from jute mills under the aforesaid conditions and later the ministry sought the finance ministry intervention in its implementation.
According to them, the outstanding loans of BJMC and private jute mills with about 24 commercial banks stood nearly at Tk 10 billion until June 30 last.
The sector insiders told the FE that the private jute mills were facing an immense fund crisis to procure raw jute, the main raw material, for running their units mainly due to an abnormal hike in price of the fibre.