BPC outstanding loans land state banks in trouble

The state-owned commercial banks (SoCBs) were facing a problem, as a large volume of loans was lying unrealised from the government's petroleum product distribution wing.
Until March last, the loans of the state-run Bangladesh Petroleum Corporation (BPC) with the SoCBs stood at Tk 8.82 billion (882 crore), according to statistics available with BPC.
Of the total loans, the BPC owed over Tk 4.29 billion to the Rupali Bank, Tk 2.07 billion to Janata Bank, Tk 1.74 billion to Sonali Bank and Tk 708 million to the Agrani Bank.
An official of the Rupali Bank Limited said the outstanding loans with some state-owned entities were slowing down the pace of their banking business.
A large volume of loans with the state-owned entities forced SoCBs to rely on deposit collection at higher rates thus reducing the profit margins of the banks, high officials with the SoCBs said.
However, a senior official of the Power Division under the ministry of power, energy and mineral resources (MoPEMR) said the BPC liabilities to the SoCBs were now at a tolerable level in comparison to any of the figures in previous years.
The government would bring down the volume of BPC loans further by introducing an automatic fuel price adjustment mechanism, an official concerned of the ministry of finance (MoF) said.
The BPC deficit was gradually increasing in the absence of adjustment of domestic fuel prices with those in international markets, BPC Chairman Md Eunusur Rahman said in a letter to the MoPEMR.
The government was paying a large amount of subsidy every year because of the mismatch between domestic and overseas prices of fuel oils, a BPC source said.
The Finance Division under the MoF issued the interest-bearing special bonds worth Tk 59.53 billion spanning seven, eight and nine-year maturity periods for the FY 2012-13 in July, 2013. The interest rate of the special bonds has been fixed at 7.0 per cent per annum.
Of the total, bonds worth Tk 25.21 billion were issued in favour of the Sonali Bank, the largest SoCB, while bonds worth Tk 16.01 billion were issued for Janata and Tk 18.12 billion for Agrani Bank, the BPC data showed.
The state entity sought Tk 72.47 billion from the government as outstanding subsidy, unpaid for the last 14 years from 1999 to 2013, sources concerned said.
The BPC sought the amount from the government to keep its fuel imports and supplies uninterrupted, they also said.
The government provided Tk 12.53 billion in financial assistance to the BPC on February 06 last.
Of the amount, Tk 8.06 billion was disbursed on account of deficit financing for the fiscal years (FYs) from 2008-09 to 2012-13 and Tk 4.46 billion for the July-September period of the current  fiscal year.