State-owned Sonali Bank has called on the government to take immediate steps to resolve long-standing unpaid loans from public sugar mills, warning that the issue is straining the bank’s balance sheet and capital position.
In a recent letter to Finance Division Secretary Dr Khairuzzaman Mozumder, Sonali Bank Managing Director Shawkat Ali Khan said nearly Tk 70 billion in loans owed by state-run sugar mills have remained unpaid for years. He urged the government to either settle the dues directly or provide relief through bond issuance or fresh state guarantees to reduce the bank’s classified-loan pressure and capital constraints.
Khan noted that the obligation to maintain higher provisions against unrealised loans is creating both direct and indirect stress on Sonali Bank’s operations. He explained that Tk 31.05 billion had been disbursed over time to the Bangladesh Sugar and Food Industries Corporation (BSFIC) and nine sugar mills. Prolonged non-payment led to the accumulation of Tk 40.73 billion in interest and related charges, pushing the total outstanding amount to Tk 71.79 billion as of September 30 last year. After repayments of Tk 2.53 billion, the net outstanding now stands at Tk 69.25 billion.
Officials said government guarantees had covered Tk 26.73 billion of the loans, but those guarantees expired in December last year. The remaining Tk 42.52 billion is not protected by any guarantees, though it is supported by a tripartite agreement involving the sugar mills, the Ministry of Finance, and Sonali Bank.
In his letter, Khan pointed out that despite remaining unpaid for several years, the loans have not been classified as non-performing because the borrowers are public-sector entities and were previously backed by government guarantees and the tripartite arrangement. However, he said the loans are still reported as “unclassified” in the Bangladesh Bank’s Credit Information Bureau (CIB) records, while the bank is required to set aside significant provisions, raising concerns about potential capital shortages in the future.
A senior Finance Division official confirmed on Monday that the ministry had received Sonali Bank’s request. The official said BSFIC is unable to repay the loans due to outstanding trade gap and subsidy claims of Tk 80.50 billion owed to it by the government. “We are reviewing options to either clear Sonali Bank’s dues or extend new state guarantees,” the official said.
