Japan International Cooperation Agency (JICA) has sought necessary steps from Bangladesh Bank (BB) to either refund or re-purpose the funds that it disbursed for certain projects.
The funds were disbursed for three sub-projects under the Two-Step Loan Component of the Urban Building Safety Project, which failed to meet the required criteria, sources said.
It has also urged the central bank of Bangladesh to confirm its preference -- repurpose the fund or refund to JICA within December 11, 2025.
The JICA recently made the requests in a letter to the project director of the Urban Building Safety Project (Bangladesh Bank Component) and Additional Director of the SME and Special Programmes Department at BB, Farid Uddin Ahmed, in reference to a previous explanation provided by the bank to this effect.
The letter highlighted the need for prompt actions from the project director regarding this matter.
As per the JICA review, all three sub-projects---Smart Knit Industries Limited, TamishnaFashion wear Limited, and GEMTEX Limited-- did not fulfill the conditions stipulated in the project documents, including the General Terms and Conditions (GTC) of the JICA Official Development Assistance (ODA) loan, the Loan Agreement, and the Minutes of Discussion.
Citing the section 3.01 of Article III and Section 6.01 of Article VI of the project agreements, JICA said the BB is to refund the disbursed amount under the three projects.
Offering the BB an alternative option, JICA in its letter said the misallocated funds may be fully or partially re-purposed for eligible ongoing or upcoming sub-projects within the project tenure.
However, JICA also clarified that the amount cannot be used as a revolving fund.
If the decision is to re-purpose the fund, the project side under the central bank must also confirm the detailed plan, including the names of the new sub-projects that meet the criteria, the Participating Financial Institutions (PFIs) concerned, the amount, and the timeline for utilization.
"If you do not take these steps, you will need to refund the whole amount to JICA," the agency cautioned in its letter, adding that detailed refund procedures would be shared once Bangladesh Bank confirms its choice.
When contacted, an official familiar with the project said: "We have initiated the next course of steps. A formal response process is already underway. Besides, we had also communicated about the matter previously."
The Urban Building Safety Project, designed to improve the seismic and fire safety of private buildings, particularly in the ready-made garment (RMG) sector, is a key development initiative supported by JICA, it was learnt.
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