Credit rating for BJMC mills made mandatory

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S M Jahangir
Credit rating has been made mandatory for mills under the state-run Bangladesh Jute Mills Corporation (BJMC) with a view to streamlining their outstanding debts lying with the banking system.
It was one of the major decisions made at a recent meeting with Textile and Jute Minister Abdul Latif Siddiqui in the chair.
The meeting was convened to discuss the recent recommendations of the Jute Advisory Committee and the Ministry of Finance on transferring the cash credit (CC) loans of BJMC mills to a ‘block account’ to help resolve their financial problems easily, a meeting source told the FE.
Secretaries and senior officials of finance, textile and jute ministries, Chairman of the BJMC and managing directors of four state-owned banks and Uttara Bank were present in the meeting.
The decision on mandatory credit rating came after a couple of state-owned banks, namely Rupali and Janata, informed the meeting that there had been mismatches between debt-related figures provided by banks and the BJMC.
The meeting also asked the relevant banks and the BJMC to jointly correct the figures on the outstanding bank loans and interest.
In line with a recommendation of the finance ministry, the meeting also decided in principle to transfer the balance of CC (cash credit) loans, as of June 30 last, of 16 jute mills and one non-jute mill under the BJMC to a block account.
The meeting also observed that a recent government decision on repayment of loans by the country’s shrimp farms could be applied in the case of the BJMC mills.
According to the decision of the finance ministry, the shrimp farms will have to repay 20 per cent of their outstanding debts and the government will repay 40 per cent while the banks concerned will waive the remaining 40 per cent.
About the proposal on exemption of outstanding interest the BJMC mills owe to banks, managing directors of Rupali, Sonali and Janata banks informed the meeting that there was no provision for waiving the charged interest.
They further said the banks normally waive interest in line with the government decision to this effect.
The textile and jute minister laid emphasis on banks’ increased support for making the country’s jute mills operationally sound and financially profitable.
“If the jute mills make profit, they will be able to repay their bank loans accordingly,” the minister told the meeting.
He also expressed hope that the BJMC mills would start repaying outstanding loans before expiry of the 30-month moratorium facility, as has been considered for them.
Earlier, the finance ministry (MoF) made a number of recommendations including restructuring outstanding debts worth more than Tk 21.35 billion and the two and a half years moratorium facility for helping the country’s jute industry cope with their financial crisis.
The MoF sent its recommendations to the Ministry of Textile and Jute following the proposals made earlier by the Advisory Committee on Jute for helping to boost the country’s jute industry through addressing the problems of local jute mills, official sources said.