BB orders ‘block account’ loan facilities for pvt jute millers

Ziaur Rahman | Published: August 04, 2014 00:00:00 | Updated: November 30, 2026 06:01:00

Bangladesh Bank (BB) has directed the commercial banks to provide "Block Account" loan facilities to private jute millers and exporters with a view to helping them to overcome the acute liquidity crisis, which put most of the mills in dire straits.
The central bank has recently issued a circular asking the managing directors of schedule banks to take necessary measures to ensure fresh working capital for private jute millers keeping their outstanding loans along with five years' interest in a 'block account' on the basis of bank-customer relationship.
The interests of 5 years' loan up to June 30, 2014 will be taken into the block account with a rate of 10.0 per cent interest with 10 years' re-payment facilities. They will also get a 2-year moratorium facility, said the central bank circular.
According to the circular, in case of non-realisation of the loans within the stipulated period, the bank will apply its own rules to realise the same and can apply the rules of classification and provisioning. To avail the facility, affected and interested jute millers and exporters are advised to apply to their concerned banks within September 30, 2014.
The central bank took the decision following a number of requests made by the Ministry of Textiles and Jute that urged the central bank to implement its earlier decision which also instructed for "block account" and loan facilities for private jute millers in a bid to salvage the ailing jute industry which is passing through a hard time due to liquidity crisis.
The Ministry of Textiles and Jute at a meeting on July 9 also urged the central bank to implement its decision for "block account" and loan facilities for jute millers and exporters.
According to sources, the private jute millers and exporters are passing through a crucial time due to lack of fund crisis. The situation has aggravated further as export earnings from jute and jute goods have also decreased substantially due to decline in demand in the international market.
Official data show export earnings from jute products dropped to US$ 824 million in the just concluded fiscal year as against US$ 1163 in the previous year. Export of jute and jute goods witnessed a 20 per cent drop while the raw jute experienced a decline of 45 per cent.
To overcome the crisis the Ministry of Textiles and Jute at a number of meetings highlighted the urgency for refinancing the jute millers and urged the Bangladesh Bank to introduce the block account facilities to the millers to keep the sector stable.
Earlier at a meeting on April 16, 2014 the central bank decided to provide 'block account' facilities to the private jute mills against bank loans and allowing fresh loan to the millers. But the banks are not implementing the decision due to lack of clear direction on behalf of the central bank.
"Implementation of the block account, only can save the jute industry," said BJMA chairman Md. Shams-uz-Zoha at a meeting of jute ministry stressing the need for immediate implementation of the decision. "If there is any ambiguity or obscurity, this should be informed to the central bank for immediate solution," he added.
The millers urged the government to provide 'block account' facilities to the private jute factories and allowing those fresh loans. They urged the banks to set the cutoff date on June 30, 2014 instead of December 31, 2013 in case of block accounts. They also demanded allowing EDF fund (Extended Development Fund) in case of import of capital machinery and spare parts.
Earlier, the Textiles and Jute Minister sent a DO 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 Bangladesh Bank to provide fresh loans to the private jute millers.