Spl treasury bond issued to help Agrani Bank address fund crisis

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Nazmul Ahsan The Ministry of Finance (MoF) has issued a special treasury bond worth Tk 8.0 billion in favour of Agrani Bank Ltd to help the latter address its liquidity crisis. The bank is facing the crisis mainly due to substantial volume of outstanding loans that the Bangladesh Petroleum Corporation (BPC) owes to it. The bond, which is interest bearing at the rate of seven per cent, is tradeable and eligible for getting re-financing from Bangladesh Bank (BB), Agrani's Managing Director Abdul Hamid Mia said. Agrani, if needed, could use the bond as Statutory Liquidity Requirement (SLR) of BB, an office order of the MoF, issued last week, said. Officials in the MoF said the decision of issuing bond came after Agrani had repeatedly been seeking fund from the government to address its liquidity crisis. The BPC owes Tk 29.01 billion to Agrani as of September 5 this year. "We have issued a special treasury bond worth Tk 8.0 billion in favour of Agrani Bank Ltd to help the bank meet its liquidity crisis. The remaining amount of money, which BPC owes to Agrani, will also be paid to Agrani either in cash or in the form of bond," a high official in the MoF told the FE Saturday. He said similar bond may also be issued in favour of Sonali Bank Ltd which has also disbursed to large amount of loan to BPC. "The bond worth Tk 8.0 billion will help us a lot as it is saleable, interest bearing and eligible for getting refinancing facility from the BB," Hamid told the FE Saturday. High officials in the state-owned commercial banks (SCBs) said BPC has been importing a large quantity of petroleum in recent months, creating fresh pressure on the SCBs to open letters of credit (LCs) with their own resources. "We have to open LCs for BPC, but the corporation cannot repay the money as it sells the imported petroleum in the local market at prices lower than the import value," a banker said.