An advisory committee of the Ministry of Textiles and Jute has urged the Bangladesh Bank (BB) to ensure fresh working capital for private jute millers, keeping their outstanding loans along with five years' interest in a 'blocked account'.
The advisory committee in its recent meeting, which was presided over by state minister Mirza Azam, also urged the banks to set the cut-off date on June 30, 2014 instead of December 31, 2013 in case of blocked accounts.
The committee took the decision in a bid to salvage the ailing jute industry facing liquidity crisis that put most of the mills in dire straits. The situation has become more aggravated as export earnings from jute and jute goods have fallen due to decline in overseas demand.
To overcome the crisis, the meeting highlighted the urgency for refinancing the jute millers and urged the BB to introduce the block account facilities to the millers to keep the sector alive.
Earlier at a meeting on April 16, 2014, the BB decided to provide 'blocked account' facilities to the private jute mills against bank loans and allowing fresh loan to the millers on the basis of bank-customer relations. But the banks are not implementing the decision due to lack of clear guidelines from the BB.
"Implementation of the blocked account only can save the jute industry," said Bangladesh Jute Mills Association (BJMA) chairman Md. Shams-uz-Zoha at the meeting stressing the need for immediate implementation of the decision.
"If there is any ambiguity or obscurity, this should be conveyed to the BB for immediate solution," he said.
The millers urged the government to provide 'blocked account' facilities to the private jute mills and allowing fresh loans. The interests of five years' loan up to June 30, 2014 will be taken into the blocked account with 2 years moratorium. They also demanded allowing EDF fund (Export Development Fund) in case of import of capital machinery and spare parts.
Earlier, the Textiles and Jute minister sent a letter to the Finance Minister to allow fresh loans for jute mills to help rejuvenate the ailing jute industry. The Finance Ministry also advised the BB to provide fresh loans to the private jute millers. It directed the central bank to keep their outstanding loans along with their five years' interest, taken until June 30, 2011, in a 'blocked account' at 8.0 per cent interest with 10 years' re-payment facilities.
Expressing their dissatisfaction over non-implementation of the decision, participants at the meeting urged the BB for giving clear directive to execute the decision. "Interest of 5 years can be put in a blocked account, but there is no instruction on down payment," said the state-owned Sonali Bank's managing director. "The BB's instruction to scheduled banks regarding blocked account is not clear," said the Bangladesh Jute Spinners Association (BJSA) secretary seeking clarification of the instruction.
The meeting was attended among others by BJMC chairman Maj Gen (Rtd) Humayun Khaled, additional secretary Shamima Sultana, director general of the jute directorate Dr. Rakhal Chandra Barman and high officials and representatives from various ministries, government organisations and related organisations including the BJMA and the BJSA.
The meeting also discussed in details the overall situation of implementation of the Mandatory Jute Packaging Act across the country. The Act aims at increasing the use of environment-friendly jute bags instead of polythene or polypropylene bags. It suggested launching of mobile court drives in mills, factories and related spots across the country soon after the Eid-ul Fitr to monitor its compliance.
The meeting also demanded withdrawal of 15 per cent VAT on licence renewal.
