Banks flout decision to bail out cash-strapped jute millers
Sunday, 21 March 2010
FE Report
The government has asked commercial banks to implement an official decision on the recovery of outstanding credit from private jute millers under certain conditions to help them continue production, sources said.
Both the finance and jute ministries separately issued instructions to the banks following their reluctance to provide the recession-hit private jute millers with loan repayment facilities.
At a recent meeting between Textile and Jute Minister Abdul Latif Siddiqui and the bankers it was agreed that the banks would keep the arrear loans along with their five years' interest until June 30, 2009 in a 'block account' for 30 months, official sources said.
The meeting also decided that the banks would start recovering the outstanding loans from the jute millers in 10 years after the 30-month moratorium period charging only 8.0 per cent rate of interest.
The textile and jute ministry had earlier asked the central bank to take necessary steps against the banks 'reluctant' to implement the agreed decision, sector insiders said.
The jute mills operators had to face serious problems both in repaying arrear debts and getting fresh working capital from banks following non-execution of the deci -sion.
According to them, the outstanding loans of BJMC and private jute mills with some 24 commercial banks were nearly Tk 10 billion until June 30 last.
The sector insiders told the FE that private jute mills were facing immense fund crisis to procure raw jute, the main raw material, to run their units mainly due to an abnormal hike in the prices of the fibre.
Prices of raw jute have already hit a record Tk 2,600 per maund in the local market on the pretext of a 'supply shortage' of the item, they mentioned.
Keeping this in view, they urged the authorities and banks to take necessary steps to implement the loan repayment facility so that the jute millers get fresh working capital.
The government has asked commercial banks to implement an official decision on the recovery of outstanding credit from private jute millers under certain conditions to help them continue production, sources said.
Both the finance and jute ministries separately issued instructions to the banks following their reluctance to provide the recession-hit private jute millers with loan repayment facilities.
At a recent meeting between Textile and Jute Minister Abdul Latif Siddiqui and the bankers it was agreed that the banks would keep the arrear loans along with their five years' interest until June 30, 2009 in a 'block account' for 30 months, official sources said.
The meeting also decided that the banks would start recovering the outstanding loans from the jute millers in 10 years after the 30-month moratorium period charging only 8.0 per cent rate of interest.
The textile and jute ministry had earlier asked the central bank to take necessary steps against the banks 'reluctant' to implement the agreed decision, sector insiders said.
The jute mills operators had to face serious problems both in repaying arrear debts and getting fresh working capital from banks following non-execution of the deci -sion.
According to them, the outstanding loans of BJMC and private jute mills with some 24 commercial banks were nearly Tk 10 billion until June 30 last.
The sector insiders told the FE that private jute mills were facing immense fund crisis to procure raw jute, the main raw material, to run their units mainly due to an abnormal hike in the prices of the fibre.
Prices of raw jute have already hit a record Tk 2,600 per maund in the local market on the pretext of a 'supply shortage' of the item, they mentioned.
Keeping this in view, they urged the authorities and banks to take necessary steps to implement the loan repayment facility so that the jute millers get fresh working capital.