Sonali Bank PLC has requested the government to issue bonds worth Tk 60 billion to settle outstanding loans of the sugar mills and Bangladesh Sugar and Food Industries Corporation (BSFIC) with the proceeds, officials said.
They said the state-owned bank has to make a hefty amount of provision against the loans due to expiry of the repayment tenure, leaving it with a severe capital shortfall and a negative impact on profitability.
Managing Director & Chief Executive Officer of Sonal Bank Md. Shawkat Ali Khan recently requested the finance ministry to take necessary action regarding the issue.
Alternatively, the bank also requested the finance ministry to repay the loans or extend the tenure of the government guarantee.
The sugar mills and BSFIC owe Tk 34.81 billion (CC hypo: OD and LTR) and Tk 22.98 billion (agri loan), and other loans of nine sugar mills Tk 2.65 billion to the bank. These are net dues (loan with interest).
An official said that though the tenures of loans are expired, these are treated unclassified due to having government guarantees and tripartite agreements.
Besides, the bank has been reporting the loans as unclassified to the Credit Information Bureau (CIB) of Bangladesh Bank.
Because of reporting the loans as unclassified, the provision cell under the CIB has asked the bank to provide detailed explanation as to why the loans are treated as unclassified.
A high official at the finance division said: "We've received the proposal and it is now under scrutiny. But no decision has been taken regarding the issue."
When contacted, Md. Shawkat Ali Khan said, "We have recently requested the finance ministry to take steps for settling the outstanding loans. If we get the support, it would be helpful to strengthen the bank's liquidity base."
Currently, the paid-up capital of the bank is Tk 45.30 billion. Its authorised capital is Tk 60 billion, a senior official at the bank said.
The state-owned bank has been providing services to its clients through 1,233 branches at home and abroad.
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