Govt may extend timeframe for counter-guarantees on five SoBs

Dhaka,  Tue,  26 September 2017
Published : 08 Jul 2017, 22:34:18
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Govt may extend timeframe for counter-guarantees on five SoBs

Fertiliser import by BCIC
FE Report

The government is considering extending the timeframe for existing counter-guarantees worth Tk 48 billion for Bangladesh Chemical Industries Corporation (BCIC) aiming to ensure uninterrupted import of fertiliser in the country, officials said.

The BCIC has recently sought to extend the tenure of the five state-owned banks' (SoBs) counter-guarantees from the ministry of finance (MoF) by one year, they said.

Some Tk 48 billion is involved against the five counter- guarantees. The MoF issued in September, 2016 counter-guarantees against the loans provided by Sonali Bank, Janata Bank, Krishi Bank, BASIC Bank and Rupali Bank. But the tenure of the guarantees expired on June 30, 2017, according to the BCIC.

The state entity has sought to extend the tenure of the guarantees to June 30, 2018 to continue fertiliser import smoothly, a MoF official said.

The MoF is now working on the BCIC issue, but it will take time to extend the deadline for the counter-guarantees, he added.

The amount of existing counter-guarantees is Tk 30 billion, Tk 10 billion, Tk 4.0 billion, Tk 2.0 billion and Tk 2.0 billion of Sonali Bank, Janata Bank, Krishi Bank, BASIC Bank and Rupali Bank respectively, according to the BCIC.

"Opening letter of credit (L/C) for importing fertiliser in the current fiscal year will be

hampered if the timeframe for existing counter-guarantees is not extended by one year," a high official of the BCIC told the FE.

The BCIC set a target to import 11.30 million tonnes of urea fertiliser for the last fiscal year. Of the amount, the state entity opened letter of credit (L/C) to import over 1.06 million tonnes of urea fertiliser, the BCIC data showed.

The banks have liability worth Tk 42.93 billion on import of more than 1.06 million tonnes of urea fertiliser. Of the amount, Tk 24.48 billion has been provided to the banks concerned against liability. Besides, over Tk 18.25 billion as liability also remained unpaid.

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