Govt to work out formula to bail out sick units: Muhith
Friday, 8 January 2010
FE Report
Finance Minister AMA Muhith said Thursday the government will soon come up with a formula to address the longstanding problems of already identified 147 sick industries.
"We will shortly decide what to do about the 147 industries that have already been identified as sick while the decision on other units, which are claimed to be sick, will be taken after scrutiny," Mr Muhith said.
Mr Muhith also said: "I do not want to see any sick industry."
The finance minister was speaking at a meeting with a delegation of the Bangladesh Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), led by it president Annisul Haq, at the former's Economic Relation Division (ERD) office.
Bangladesh Bank (BB) Governor Atiur Rahman, Finance Secretary M Tareq, and senior officials of the finance ministry and the central bank were present at the meeting.
The finance minister made the aforesaid observation after a delegation of the country's apex trade body - FBCCI - sought government's help to bail out the privately-owned sick industries.
"We want to take exit from this situation once and for all," the FBCCI president said.
For facilitating the exit, the FBCCI leader proposed for suspension of the 'Arthorin Adalat' cases against the sick industry owners until the taskforce on sick industries submit its report.
Other proposals include settlement of the outstanding debt that the sick industries owe to banks, adjusting the amounts they have paid to banks with their respective principal loans and relaxation of an earlier circular on 'cost of fund'.
About a proposal on the exemption of sick industries' outstanding debt with banks, the BB governor observed that someone has to compensate the debts for the survival of the concerned banks, especially the state-owned commercial banks (SCBs).
"Already the SCBs are in pressure …Not a single taka of loss to the banks will be allowed further," he said.
The BB governor also observed that the issue relating to sick industries should not persist for an indefinite period.
The business delegation, however, suggested a formula for bailing out the sick industries, under which the government and the banks concerned could each share 40 per cent of the outstanding debts while the owners of respective industries could pay the remaining 20 per cent.
Responding to the suggestion, the finance ministry and BB officials observed that the banks had little scope to waive the interest after showing the same as their earnings.
But the banks can waive the unapplied interest only, they mentioned.
The meeting was informed that except for the 147 identified sick industries by a 'Munsif Committee', a bailout formula was earlier introduced for the country's 270 sick RMG (readymade garment) and 108 other specialised textile units.
Finance Minister AMA Muhith said Thursday the government will soon come up with a formula to address the longstanding problems of already identified 147 sick industries.
"We will shortly decide what to do about the 147 industries that have already been identified as sick while the decision on other units, which are claimed to be sick, will be taken after scrutiny," Mr Muhith said.
Mr Muhith also said: "I do not want to see any sick industry."
The finance minister was speaking at a meeting with a delegation of the Bangladesh Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), led by it president Annisul Haq, at the former's Economic Relation Division (ERD) office.
Bangladesh Bank (BB) Governor Atiur Rahman, Finance Secretary M Tareq, and senior officials of the finance ministry and the central bank were present at the meeting.
The finance minister made the aforesaid observation after a delegation of the country's apex trade body - FBCCI - sought government's help to bail out the privately-owned sick industries.
"We want to take exit from this situation once and for all," the FBCCI president said.
For facilitating the exit, the FBCCI leader proposed for suspension of the 'Arthorin Adalat' cases against the sick industry owners until the taskforce on sick industries submit its report.
Other proposals include settlement of the outstanding debt that the sick industries owe to banks, adjusting the amounts they have paid to banks with their respective principal loans and relaxation of an earlier circular on 'cost of fund'.
About a proposal on the exemption of sick industries' outstanding debt with banks, the BB governor observed that someone has to compensate the debts for the survival of the concerned banks, especially the state-owned commercial banks (SCBs).
"Already the SCBs are in pressure …Not a single taka of loss to the banks will be allowed further," he said.
The BB governor also observed that the issue relating to sick industries should not persist for an indefinite period.
The business delegation, however, suggested a formula for bailing out the sick industries, under which the government and the banks concerned could each share 40 per cent of the outstanding debts while the owners of respective industries could pay the remaining 20 per cent.
Responding to the suggestion, the finance ministry and BB officials observed that the banks had little scope to waive the interest after showing the same as their earnings.
But the banks can waive the unapplied interest only, they mentioned.
The meeting was informed that except for the 147 identified sick industries by a 'Munsif Committee', a bailout formula was earlier introduced for the country's 270 sick RMG (readymade garment) and 108 other specialised textile units.