Govt turns down Ansar-VDP Bank\'s plea for loan guarantee

The government has declined to issue a $100 million guarantee to Ansar-VDP Unnayan Bank for taking out foreign loan from a German company, officials said.
The state-owned specialised bank has recently sought a loan guarantee from the finance ministry, but the ministry rejected its proposal on different grounds.
"We did not find any accurate evidence on and address of ObwaGmBH, a German private lender. Even Bangladesh Bank (BB) and Bangladesh embassy in Germany did not certify the proposed loan. As a result, the government can't issue guarantee against the loan," an official of the ministry told the FE.
Besides, there is no tradition of taking out private loan by any state-owned entity from any foreign private company. Earlier, Biman Bangladesh Airlines had tried to get foreign private loan. But the national flag carrier failed to take out any loan. In this regard, complexities had arisen during the agreement and guarantee between the government and private lender or company, he added.
"The loan will be disbursed to its beneficiary in local currency and earning of the bank from the loan will also be in local currency. There is no scope to earn foreign currency by proposed loan."
Besides, there is no need to take out foreign loan because of adequate funds available in the country, he mentioned.
The repayment method of the loan is "bullet payment." For this reason, risk of loan repayment is very high, he also said.
The tenure of the loan is 18 years and the rate of interest is 2.5 per cent annually, according to bank sources.
"The bank needs loan urgently. We would provide loan to poultry and housing sectors including other trades if the loan could be taken out from the German company," General Manager of Ansar-VDP Unnayan Bank Tapan Kumar Saha told the FE on Sunday.
Besides, the capacity of loan disbursement and the amount of capital of the bank would increase if the government guarantees the loan, a high official of the bank said.
Currently, the authorised capital of the bank is Tk 1.07 billion and there are 219 branches and 18 regional offices in the country.
The main objectives of this bank are to alleviate poverty of marginal Ansar-VDP members in particular, women empowerment and economic well-being by providing banking services to a large number of Ansar-VDP members.
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