State lenders still bear legacy of public sector bad debts
Courtesy New Age 7/5/08
The state-owned lenders continue to bear the legacy of the public sector bad debts even after their corporatisation, with the finance ministry shutting its eyes to huge arrears of mills, some disinvested long ago.
The government’s liabilities for jute and textile mills soared by Tk 213 crore this year from the year before, according to figures available up to March.
Thirty-two jute mills and textile mills in the public sector owed four government-owned commercial banks about Tk 1,670 crore as of March, 2008, official figures showed.
But the finance ministry seems reluctant to relieve the banks of the huge liabilities and inject fresh fund to help three corporatised lenders and stymied Rupali Bank run viably, banking and financial sources said.
The banks demanded special budgetary allocation in the next fiscal year to clear their books of huge arrears in the public sector.
The government assumed the liabilities of the state-owned enterprises, which were privatised from 1994 until recently.
The public sector industries, dogged by chronic losses and bad management, took the bank loans to purchase raw jute or yarn, meet working capital needs and pay wages to the staff against loan repayment guarantee from the finance ministry.
Sonali Bank bears the highest amount of arrears, followed by Agrani, Janata and Rupali banks, sources said.
The liabilities of 13 jute mills stood at Tk 991.03 crore, while the rest Tk 674.79 crore was owed by 19 textile mills.
Madaripur Textile, Sharmin Textile and Kishoreganj Textile mills, which were privatised in December 1994, owed the banks Tk 60.92 crore, Tk 74.43 crore and Tk 55.95 crore respectively.
Three other mills of Bangladesh Textile Mills Corporation — Kohinoor Spinning, Zofine Fabrics and Barisal Textile — which were privatised in 1995, have about Tk 125 crore in arrears.
Unpaid debts of Zeenath Textile accumulated to Tk 69.08 crore, while Noakhali Textile owed Tk 19.94 crore, Kokil Textile Tk 17.23 crore, Meghna Tk 50.31 crore, Olympia Tk 57.69 crore, Karelin Silk Tk 42.76 crore, Luxminarayan Cotton Tk 17.23 crore and Monno Textile Tk 26.63 crore.
The situation is same for mills owned by Bangladesh Jute Mills Corporation, with now-defunct Adamjee Jute Mills topping the list of defaulters alone owing the four banks Tk 415.81 crore.
Other major defaulting jute mills include People’s Jute Mills in Khulna [lease being processed] with Tk 229.20 crore, Kawmi Jute Mills in Sirajganj [lease being processed] with Tk 109.34 crore, Karnaphuli Jute in Chittagong [lease being processed] with Tk 82 crore, Nishat Jute Mills at Tongi [divested in 2003] with Tk 35.47 crore, Daultapur Jute Mills in Khulna [not yet transferred] with Tk 34.61 crore, Pubachal Jute Industries [privatised in 1997] with Tk 3.62 crore, Mymensingh Jute Mills [privatised in November 2003] with Tk 14.46 crore and Bawa Jute Mills [privatised in April 2004] with Tk 13.12 crore.
Officials of the state-owned banks said the government was obliged to clear the liabilities since it was the guarantor of the loans, but had been reluctant years after years to repay the debts.
The finance ministry should take immediate steps to repay the debts of BJMC and BTMC if it wants to see the corporatised banks overcome capital inadequacies and return to the black.
‘I strongly believe that budgetary allocation could be the best solution, instead of support through bonds,’ Syed Abu Naser Bukhtear Ahmed, chief executive officer of Agrani Bank Ltd told New Age.
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