Bangladesh Bank allows defaulter Abdul Monem to open import LC

Bangladesh Bank (BB) has relaxed a provision of the Bank Company Act, 1991 until June 30, 2027 in favour of defaulter Abdul Monem Sugar Refinery Ltd (AMSRL), allowing it to open import LCs (letters of credit).

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However, the banking regulator has asked banks to maintain a 100 percent cash margin for opening LCs.

After receiving an application from the company, BB relaxed the law before obtaining approval from the government, said a senior official of the central bank.

He said the initiative was taken to keep the refinery operational and ensure the uninterrupted import of raw materials.

The central bank official said this is part of the new government's focus on reopening shuttered factories, creating jobs, and boosting production.

In line with these efforts, Bangladesh Bank has been relaxing various policy measures, he said, adding that, at the same time, it is trying to bring down the volume of non-performing loans.

"This relaxation is part of a broader package of policy support being extended to businesses."

"In exercise of the powers conferred by Section 121 of the Bank Company Act, 1991 (Act No. 14 of 1991), it is hereby notified for the information of all concerned that the provisions of Section 27Ka (3) of the Bank Company Act, 1991 shall remain inoperative until June 30, 2027 in cases where any bank opens an import letter of credit (LC) in favour of AMSRL against a 100 percent cash margin," according to the central bank circular issued today.

Under Section 27Ka (3) of the Bank Company Act, 1991, no loan defaulter is eligible to obtain new loans or open LCs.

The circular also said that no liability shall accrue to the government or Bangladesh Bank in respect of any credit facility extended under this exemption, and no bank shall, in the future, be entitled to claim any financial assistance from the government.

Abdul Monem Group has outstanding loans of Tk 2,378 crore with several banks, including Agrani Bank, IFIC Bank, One Bank, and Social Islami Bank. Of the total, Tk 698 crore had turned non-performing as of March 2025.