Shinepukur Ceramics gets special LC facility

The Bangladesh Bank (BB) has allowed Shinepukur Ceramics, a defaulting company of Beximco Group, to open letters of credit (LCs) for raw material imports under a special arrangement.

In a notification issued yesterday, the central bank said the move is meant for keeping production running at the ceramics manufacturer and protecting its workforce.

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Under the arrangement, Shinepukur Ceramics can now open import LCs with Sonali Bank PLC by depositing a 100 percent margin, meaning the company will have to pay the full import value in advance.

The facility will remain in place until December next year.

Under Section 27 Ka Ka (3) of the Banking Companies Act, banks and financial institutions are barred from extending any loan facility to a defaulting borrower. With yesterday’s circular, the BB has exempted Shinepukur Ceramics from this provision for 18 months.

As a condition of the approval, the central bank said all revenue earned by the company must be deposited into a designated bank account. Sonali Bank will recover its outstanding dues from that account on a proportionate basis.

However, the government and the central bank will not assume any responsibility for the loan facility provided to support the opening of the import LCs, according to the notification.

As a result, Sonali Bank will not be able to seek any financial assistance from the government or the BB for those loans in future, the central bank said.

Earlier this month, the BB granted a similar facility to Abdul Monem Sugar Refinery Ltd, another defaulting borrower, allowing it to continue opening import LCs.