MoF issues letter of guarantee for SCBs' loans to BJMC

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Nazmul Ahsan
The Ministry of Finance (MoF) has issued a guarantee in favor of Bangladesh Jute Mills Corporation (BJMC) for bank loans worth Tk 5.0 billion under the refinancing facility of Bangladesh Bank (BB), official sources said.
Four state-owned corporatised banks -- Sonali, Janata, Agrani and Rupali -- will lend the money to 16 jute mills under the BJMC, said the letter of guarantee (LG), issued by the MoF.
The fund will be used by the corporation as working capital of the jute mills concerned, officials in the ministry said.
Earlier, a meeting presided over by Prime Minister Sheikh Hasina on macro-economic situation asked the MoF to arrange Tk 5.0 billion for BJMC under the refinancing facility of BB so that corporation did not face any shortage of cash to purchase raw jute.
"The government wants to patronize the jute sector to help improve its productivity and export performance," a top MoF official said.
"BJMC has to show its prudence in removing its public image as a bankrupt institution to get the fur ther support and patronization from the government."
According to the LG, Sonali will lend Tk 1.09 billion, Janata Tk 2.64 billion, Agrani Tk 620 million and Rupali Tk 630 million.
The BJMC has to repay the loan amount to four banks within the next 20 years from its export proceeds, the guarantee letter of MoF said.
However, it is learnt the banks concerned that consider the BJMC as an 'errant' client are yet to act on the MoF letter.
The BJMC owes about Tk 4.0 billion to four banks in unpaid loans.
"The loans disbursed under instructions from above to BJMC causes huge problem for us as a substantial amount of loan paid to BJMC are still classified," a top banker of a government-owned bank said.
"After transforming the banks into corporatised entities, the government should stop asking the management of the bank to lend money to any errant public sector client," he added.
The guarantee of the government shall remain valid until June 30, 2030.
Officials in the BJMC said the mills under the corporation are becoming profitable as the export earnings of 24 mills of BJMC have been increasing due to higher demand of jute goods.
"We need government support for some more time and will become profitable very soon," a top BJMC official said.
Insiders said problems like higher overhead expenditure, corruption, excessive trade unionism and lack of long term planning are still hurting the public jute mills.