FBCCI opposes BB’s single borrower exposure criteria

Bangladesh’s apex trade body opposed the central bank’s new single borrower exposure limit on Thursday, arguing that it would limit the business community’s access to loans.

Bangladesh Bank issued a new policy on loans last Sunday, asking banks to reduce single borrower exposure. Previously, banks could issue various non-funded and direct funded loans, including bonds and guarantees, up to 35 per cent of the capital. But now, the amount has been capped at 25 per cent. 

“Businessmen will be hurt if the policy comes into effect,” said Md Jashim Uddin, the president of Federation of Bangladesh Chambers of Commerce and Industry (FBCCI). Speaking at an event to distribute CIP Cards among the business people in the trade and exports category for 2018, he expressed indignation at formulating such a policy without consulting the commerce ministry and FBCCI.

The government awarded the Commercially Important Person (CIP) cards to 176 businessmen for their outstanding contribution to export and trade. Of them, 138 recipients got the cards under the export category and 38 under the trade category. Commerce Minister Tipu Munshi handed over the cards to the recipients at Sonargaon Hotel in Dhaka.

Bangladesh Bank has redefined the loan limit under the new rules. Besides, the percentage of a bank’s large loan amount has also been specified.

Prior to a revision of the incentive amount on January 1, 2022, the remitters were receiving the incentive at the rate of 2 per cent from the beginning of the Fiscal Year 2020-21.

BB has asked banks to implement the new policy within the current year.

A group will not get more than 25 per cent non-funded and funded loans (except interest). In this case, the funded loan will be a maximum of 15 per cent. For all types of non-funded loans, the liability of Tk 100 should be calculated as Tk 50 and the liability of Tk 100 in the power sector should be calculated as Tk 25.

Loans were earlier calculated with interest but now they will be calculated with basic loans and loans facilities. Those who have not repaid loans will get more benefits. 

As a result, the credit limit for the export-oriented sector will increase by 35 per cent and the power sector limit will go up to 55 per cent. This means, the credit limit for the export-oriented sector has been reduced by about 15 per cent. Ninety per cent of the export-oriented sector is related to the garment sector.

Businessmen have demanded changing the new policy.

Commerce Minister Tipu said Bangladesh has already become a developing country. After 2026, Bangladesh will have to compete with the developed world. “We need to be prepared for this. In order to survive in the competition, one has to increase one’s skills in business. There is no alternative to increasing exports for the country’s development,” he said.

Who are the CIPs?

A special gazette notification was published on December 7 last year, announcing the names of the CIPs. The notification mentioned that the CIPs would enjoy some privileges from the government for the next one year period or before declaring the names of next year’s CIPs.

CIP card holders will enjoy priority in seat reservation at government transports in air, road, rail and waterways and getting invitation at national events, among other facilities.

The CIPs include – Hasan Ahmed managing director of Popular Jute Exchange, Sheikh Nasir Uddin chairman of Akij Jute Mills, Md Fazlur Rahman managing director of Rahman Jute Spinners, Mohammed Anisur Razzaque chairman of Tropical Shoe Industries Group, Ziaur Rahman managing director of Bay Footwear, Md Saiful Islam managing director of Picard Bangladesh, Md Nazmul Hassan managing director of Leatherex Footwear, Md Hedayetullah managing director of FB Footwear and Zainal Abedin Majumder managing director of Abedin Group, Iqbal Ahmed managing director of Sea Mark, Shyamol Das managing director of MU Sea Foods, Md Shahin Howlader chairman of Crimson Rosella Seafood, SM Mizanur Rahman managing director of Atlas Sea Foods, Md Mehedi Hassan managing director of Bright Sea Foods Group, Md Taauhidur Rahman managing director of Fresh Foods, Masud Parvez, managing director of Salam Sea Foods Group, Sharif Zahir managing director of Ananta Apparels, Md Ismail Hossain managing director of Sharmin Apparels, Inamul Haq Khan managing director of Ananta Garments, Miran Ali managing director of Tarashima Apparels, Ahsan Kabir Khan managing director of Interfab Shirt Manufacturing, Tanvir Ahmed director of Cosmopolitan Industries, Mustajirul Shovon Islam managing director of Sparrow Apparels, Abul Kashem deputy managing director of AKH Fashions, Md Ali Azim Khan managing director of Shinest Apparels, Md Refayet Ullah Khan director of Tusuka Trousers, Md Khasru Chowdhury managing director of Nipa Fashion Wear Industry, Wasim Rahman managing director of MBM Garments, Md Siddiqur Rahman chairman of Bando Design, Mujibur Rahman managing director of Smart Jeans, M Sazzad Alam managing director of Raquef Apparels, Humayun Rashid director of Energypac Fashions, AK Azad managing director of Ha-Meem Group, Abdus Salam Murshedy managing director of Envoy Group, Atiqul Islam director of Islam Group, Lutfe Mawla Ayub chairman of Rabab Fashion Group, Md Aziul Islam managing director of Alif Group, Sejuti Daulah director of Dird Garments Group, Syed Nurul Islam chairman of Well Group, Mohammad Monsur managing director of Monsur General Trading, Gobinda Chandra Saha proprietor of Rajdhani Enterprises, Omar Farooque proprietor of Alin Foods Trade, Harun Ar Rashid proprietor of Harun Enterprise, Sheikh Abdul Kader proprietor of Agriconcern, Md Rafiqul Islam Liton proprietor of Liton World Link, Enamul Hassan Khan chairman of Promi Agro Foods, Anjan Chowdhury managing director of Square Food and Beverage, Abdul Motaleb chairman of Kishwan Snacks, Ahsan Khan Chowdhury managing director of Pran Diary, Mizanur Rahman Bhuiyan managing director of Uniglory Cycle Industries, Subrata Paul proprietor of HR International, Samuel S Chowdhury chairman of Square Pharmaceuticals, Nazmul Ahsan managing director of Beximco Pharmaceuticals, Shafiqul Alam Selim managing director of Karupannya Rangpur, Towhid Bin Abdus Salam proprietor of Classical Handmade Products BD, Md Belal Hossain chief executive officer of BD Creation, Bartha Geeti Baroi director of Corr the Jute Works, Abu Alam Chowdhury proprietor of Conexpo, Mohammad Abdullah Zaber director of Zaber and Zubair Fabrics, Masood Dawood Akbani managing director of ACS Textiles, Abdullah Mohammad Talha director of Noman Terry Towel Mills and Jashim Uddin managing director of Bengal Group, among others.