Bangladesh Bank likely to give similar facilities for pvt jute mills as state owned mills

The Bangladeshi private jute millers are facing acute fund constraints due to decline in exports of jute goods. Under the Bangladesh Jute Mills Association, the mills have been demanding similar financial assistance from the government that is being given to the state-owned jute mills
to run their mills.

The Ministry for Textile and Jute recently urged the central bank to instruct the scheduled banks to implement the decision of the ministry’s advisory committee on jute to give private mills equal facilities which the BJMC mills are now enjoying.

Despite repeated instructions from the ministry, the banks are not implementing the directives, said the ministry in a letter sent to the Bangladesh Bank (BB) governor on Thursday requesting him to take necessary measures to implement the orders.

An advisory committee meeting of the Ministry of Textiles and Jute last year decided on sanctioning of fresh working capital for private jute millers, keeping their outstanding loans along with five years’ interest in a ‘blocked account’.

The interests of five years’ loans upto June 30, 2014 will be deposited to the blocked account with 2 years’ moratorium as per the decision taken.

The advisory committee also urged the banks to implement the decisions to keep the sector alive.

The millers also demanded allowing EDF fund (Export Development Fund) in case of import of capital machinery and spare parts and 30 per cent grant to purchase machinery from abroad.

Barik Khan, secretary of the BJMA, the private mills apex body, highlighting the urgency for implementing the decisions immediately as the private jute mills hardly get any facility that are given to the BJMC jute mills such as clearing bank debts, advance bank loan and incentives. In fact, the private jute mills have to face a lot of difficulties in getting even simple loans.

The Ministry of Finance (MoF) in 2012 cleared all liabilities that the BJMC mills owed to three state-owned commercial banks (SoCBs) — Sonali Bank, Janata Bank and Agrani Bank — through the issuance of special bonds. But mills under the BJMA hardly get such facilities, said Mr Barik Khan.

Earlier at a meeting on April 16, 2014, the BB decided to provide ‘blocked account’ facilities to the private jute mills against bank loans and allowing fresh loan to the millers on the basis of bank-customer relations. But the banks are not implementing the directives which forced the ministry to issue another reminder to implement the same.

To overcome the crisis, the Ministry of Textiles and Jute at a number of meetings highlighted the urgency for refinancing the jute millers and urged the Bangladesh Bank to introduce the block account facilities to the millers to keep the sector running.

At present, about 212 jute mills are in operation in the country. Of these, 21 are run by the government and the rest by private owners.

Official data show export of jute and jute goods witnessed a 20 percent drop while raw jute export experienced a decline of 45 per cent. Country’s export earnings from jute products has dropped to US$ 824 million in last fiscal year as against US$ 1,163 in the previous year.