Govt okays $85m costly China loan

BR to buy 200 MG coaches with it

FE Report | October 29, 2019 00:00:00

The government is taking a hard-term loan amounting to US$ 85 million from China for purchasing railway coaches.

The Standing Committee on Non-concessional Loan, headed by Finance Minister A H M Mustafa Kamal, approved the Chinese supplier's credit at its meeting in Dhaka on Monday.

After the meeting, Mr Kamal said the Bangladesh Railway (BR) will import 200 metre-gauge (MG) passenger coaches from Chinese market.

The BR will procure the MG coaches from the Chinese company CRRC Sifang Co. Limited within June 2020 under a Tk 9.27-billion cost project for improving its fleet.

A Chinese commercial bank - Credit Agricole Corporate & Investment Bank - will provide the loan, equivalent to $84.97 million, to supply the coaches.

The interest rate of the loan will be charged at 6-month EURIBOR (Euro Interbank Offered Rate) + 2.0 per cent rate per year.

Besides, the Bangladesh government will have to pay $5.41 million fund as insurance premium, 25 per cent of the applicable margin on undisbursed loan as commitment fee, and 1.3 per cent as arrangement fee for taking the Chinese loan.

The maturity period of the loan is 15 years, where three years will be offered as the grace period.

Meanwhile, when asked about the International Monetary Fund's (IMF) recent observation about the non-performing loans (NPLs) in the banking sector, the finance minister declined to reply, as a case in this regard is now pending in the High Court (HC).

"As the issue is now under hearing in the HC, I should not comment on it. We've not changed our position on recovering the NPLs by announcing the exit plan (for defaulters)."

"But since the HC is dealing with the issue, I hope the government's key purpose in recovering the loan will be upheld in the court too," Mr Kamal added.

Earlier, the government offered the facility of repaying loans to NPL-holders within 10 years period at 9.0 per cent interest rate.

If the loan defaulters want to take this facility, they will have to pay 2.0 per cent of their loan as down-payment before repaying the entire loan.

The country's commercial banks are struggling with some Tk 1.12 trillion NPLs in their outstanding portfolio over the years.

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