Bangladesh Bank relaxes laws for City Group loans

Bangladesh Bank has suspended a specific clause of the Bank Company Act to allow five defaulting entities under the City Group to receive 3,000 crore BDT in working capital loans. The suspension, signed by Deputy Governor Kabir Ahammed, will remain effective until December of next year.

The decision removes legal barriers that previously prevented defaulting borrowers from obtaining new credit. A syndicate led by City Bank will manage the loans for the following entities: City Seed Crushing Industries Limited, City Sugar Industries Limited, City Edible Oil Limited, City Dal Mills Limited, and Shampa Flour Mills Limited.

To mitigate risk, the central bank has imposed several conditions. The government and Bangladesh Bank will hold no liability for these loans, and the City Group must provide adequate collateral through registered mortgages. Additionally, proceeds from the sale of goods purchased with these funds must be deposited into a specific bank account to ensure priority repayment to the lending syndicate.