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Banks told to follow debt recovery guidelines for jute sector

Apr '10
The Bangladesh Bank (BB) has directed commercial banks to implement an official decision that lays down specific conditions for the recovery of overdue credit from private jute mill owners so that they can continue with the manufacturing process, said sources.

Under the conditions, the arrears on loans along with calculated till June 30, 2009 that the private jute mills owe to banks, be kept in a 'block account' for 30 months, after which the total outstanding be recovered in a period of 10 years, by charging interest rate of 8.0 per cent.

According to the official sources, the Central bank's circular came after the Finance Ministry's recent directions in this regards.

Earlier, the Textile and Jute Minister, Abdul Latif Siddiqui in a meeting with the bankers had decided to recover the overdue debts from the jute mill owners in accordance with the aforementioned guidelines and then subsequently the Ministry called for Finance Ministry's interference for its due implementation.

The overdue amount of loans that the BJMC and private jute mill owners owe to almost 24 commercial banks, as on June 30, 2009, totals to around Tk 10 billion.

According to experts, the private jute mill owners have been experiencing huge financial crisis which has made it difficult for them to acquire raw jute, as the fibre prices have increased exorbitantly.

Fibre2fashion News Desk - India

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