BSFIC owes Tk 93.38b to five state-run banks
The Bangladesh Sugar and Food Industries Corporation (BSFIC) owes a total of Tk 93.38 billion to five state-run banks. Of the amount, Tk 21.24 billion is classified as waivable, Tk 72.14 billion as recoverable, while the balance is Tk 79.54 billion.
For the BSFIC, the government had proposed a down payment worth 2 per cent of the balance, or Tk 1.59 billion, to be paid to the five banks. Besides, another Tk 2.96 billion was to be paid in installments on a quarterly basis.
However, the industries ministry issued a letter to the finance ministry’s financial institutions division on 24 September, expressing inability to repay either of the down payment and installment.
The five state-run banks are – Sonali Bank, Rupali Bank, Agrani Bank, Janata bank, and Krishti Bank.
In the letter, the industries ministry demanded that the Bangladesh Bank issue a special gazette notification, exempting the BSFIC from the obligation of down payment and quarterly installments. It sought that the existing interests be waived and no additional interest be levied on the recoverable amount. The amount will be transferred as an interest-free block.
Selim Raihan, executive director of the South Asian Network on Economic Modeling (SANEM), said entities like the BSFIC maintain a long record of losses as they do not operate in a proper way.
He pointed out that selling sugar which is produced at Tk 160 per kg at just Tk 60 per kg does not align with any economic rules. Individuals with no knowledge about the sectors concerned are recruited to the managerial positions in government agencies.
A special gazette by the Bangladesh Bank may ease up the situation for the time being, but the focus should be shifted from temporary relief to permanent solutions, he added.
On the day before the downfall of the Sheikh Hasina government, Sheikh Shoyebul Alam retired as the chairman of BSFIC. He earlier issued a letter to industries secretary Zakia Sultana on 30 May, mentioning that then prime minister Sheikh Hasina verbally instructed for waiving loan interests of sugar mills.
The industries secretary reported the issue to financial institutions division secretary, Sheikh Mohammad Salim Ullah, and the latter took the issue to the central bank governor Abdur Rouf Talukder.
A meeting chaired by Salim Ullah on 26 September last year brought together representatives from the Bangladesh Bank, five state-run banks, BSFIC, and the industries ministry. It decided to form a committee to review the issue, while the committee later recommended payment of the recoverable amount by floating bond.
The Bangladesh Bank, in an statement on 5 February this year, noted that there are scopes for avoiding more interests against the recoverable amount and transferring the entire amount as an interest-free block. Also, the boards of respective banks may take a decision in this regard, and it does not require prior approval from the central bank.
After three months, the BSFIC issued letters to the five banks in this regard on 5 May.
In his letter, Shoyebul Alam noted that Sonali, Janata, and Krishi banks formally sought a comprehensive proposal from the corporation, alongside the down payment and the quarterly installment, while Agrani and Rupali banks informed the same verbally.
While talking to Prothom Alo over the phone, Sheikh Shoyebul Alam said, “It is an incident from the distant past. As far as I recall, the verbal instruction of the former prime minister was directed to the industries minister and secretary. Multiple letters were exchanged then but it did not work out eventually.”
Industries secretary Zakia Sultana is still serving in the position. She told Prothom Alo that then prime minister Sheikh Hasina had issued verbal instructions to her on the sideline of a cabinet meeting, in presence of then industries minister.
The secretary said the BSFIC is in such a poor state as sugar is sold at far below the production cost. It is a policy problem, and a special gazette by the Bangladesh Bank may facilitate a temporary solution.
Zakia Sultana also said, “The loan of BSFIC is increasing on a regular basis. The industries adviser (Adilur Rahman Khan) took the issue seriously, and I hope there will be a decision from the financial institutions division and Bangladesh Bank in favour of us.”