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Muhith snubs jute ministry plan for low-cost loan for pvt mills

Seeks opinions from BB

Nazmul Ahsan

A file photo shows labourers carrying jute to a private jute mill at Demra in Dhaka. — New Age photoA file photo shows labourers carrying jute to a private jute mill at Demra in Dhaka. — New Age photo

Finance minister AMA Muhith has rejected proposals of textile and jute ministry seeking low-cost bank loans to revive the ailing private jute mills in the country and a provision for keeping their defaulted loans blocked for five years in special accounts.
Instead, the finance minister has directed Bangladesh Bank to come up with specific suggestions for salvaging more than 90 private jute mills.
The directives of Muhith are largely similar to a set of recent recommendations made by a finance ministry-sponsored committee, a top finance ministry official said.
Of the ailing private jute mills, more than 40 currently hold above Tk 900 crore in bad loans with four state-owned commercial banks, sources in the banking sector said.
The textile and jute ministry in October placed five-point rescue plan to Muhith to support the private jute mills. The finance ministry, before making any concrete decision on the demands, formed a committee last month comprising representatives from public and private sectors.
The committee, headed by an additional secretary of the Finance Division under the finance ministry, submitted its report last week.
‘The minister [Muhith] has rejected the five-point demands of the textile and jute ministry and asked the BB to give their opinions to make a breakthrough in the longstanding issue,’ a high official in the ministry told New Age.
He said Muhith made the decision based on the recommendations of the committee report.
The textile and jute ministry in its demands sought export cash credit from banks at a seven per cent interest rate, keeping provision of blocked accounts in banks concerned for defaulted loans of private jute mills operators, low-cost bank loans for balancing, modernization, rehabilitation, expansion purposes of age-old private jute mills, providing 30 per cent government fund on the import cost of capital machinery used in the mills and introduction of an extra exchange rate regime for the sector.
Private jute millers said the demand of the ECC was not unique in the country as the proposed facility had long been in place to boost the export-oriented leather sector.
They said private jute millers were the worst victim of an uneven competition as the public sector jute mills had been enjoying state support.
The finance ministry sources said the ministry had asked the BB to give their opinions as to whether the current export credit circular could be amended to provide the facility to jute sector similar to that of leather industry.
On ‘blocked account’, the finance official said after getting the positions from the BB, they would sit with four-SCBs as the issue should be settled under a bank-client relations strategy.
‘In this particular case, the bank-client relation is of paramount importance regardless of the to-be placed opinions from the central bank,’ the official said.
He said, ‘The finance ministry has the opinion that the private jute mills operators have a commendable role in extending support to rural agriculture sector as they alone consume above 60 per cent of total raw jute produced in the country.’
The genuine demand will be met to infuse dynamism in the country’s private jute mill industry, he added.




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Muhith snubs jute ministry plan for low-cost loan for pvt mills

A file photo shows labourers carrying jute to a private jute mill at Demra in Dhaka. — New Age photo
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