The state-owned Sonali Bank has lost its capacity to finance the government’s fresh imports, especially done by the Bangladesh Petroleum Corporation (BPC) and the Trading Corporation of Bangladesh (TCB), as it is reeling under acute liquidity shortages.

According to Bank insiders, the Bank’s liquidity was eroded up by high borrowing of the government and disbursement of non-viable loans of bigger amount that has been approved without proper procedures. One such big loan of Tk 35.47 billion was disbursed by the Bank management to a private sector business entity, Hallmark Group.

On Monday last, the Bank management has expressed its inability to pay BPC’s fresh import bills amounting to $14 million (Tk 1.14 billion). Simultaneously, the management decided not to finance TCB’s any new import liability, as the state-run trading company does not pay its ‘overdue’ loans to the Bank.

A high official of the Bank said the bank already provided excess financing against ‘BPC guarantee’ to meet the state-run corporation’s import liability.

The official said Sonali Bank, meantime, has financed Tk 75.5 billion against BPC’s Tk 50 billion as ‘guarantee’.

“We are really unable to pay fresh import bills as our liquidity strength has been eroded up in recent years. What is needed right now is to save this Bank by applying cautious policy,” the official said seeking anonymity.

The official said Sonali Bank had long been enjoying its status of lender in the call money market but it recently turned into a borrower bank due to high borrowing of the government and non-viable loan disbursement, which has less possibility of recovery.

“But, in recent months, this bank has borrowed an amount Tk 50-70 billion from the call money market to make its daily transactions viable,” said the official.

Meanwhile, the amount financed by Sonali Bank to pay TCB’s import bills has increased to Tk 3.91 billion. Of the amount, Tk 6.9 million has already turned ‘overdue’ which TCB has not repaid, said the official.

He said the Bank has given LTR (Loans against Trust Receive) to the TCB, but the state-run agency is reluctant to repay even after selling its imported goods.

LTR is a sort of financing, under which the borrowing party shall repay to the lending bank on sale of its imported goods, according to banking company acts.

This correspondent could not attach any authoritative comment from TCB as a phone (mobile) call to its Chairman Brig. Gen. Sarwar Jahan Talukder went without response last afternoon.

News: Daily Sun/Bangladesh/29-Aug-12