Bangladesh Bank grants City Group special exemption from Banking law for new loans
Collected image.
Bangladesh Bank has granted City Group a special exemption from certain provisions of the Bank Company Act to enable it to obtain fresh working capital loans. As a result, banks currently face no legal obstacles to extending syndicated loan facilities to five companies under the group.
The central bank’s Banking Regulation and Policy Department-2 issued a circular in this regard on Wednesday. It granted a special exemption from Section 27KaKa (3) of the Bank Company Act, 1991, for providing syndicated working capital loan facilities to five City Group companies.
The companies are City Seed Crushing Industries Limited, City Sugar Industries Limited, City Edible Oil Limited, City Dal Mills Limited and Shampa Mills Flower Limited.
The circular issued by Bangladesh Bank did not specify the names of the five companies, the total amount of the loan facilities, the number of participating banks, the loan tenure or the detailed conditions of the exemption. However, copies of the circular were sent to the chief executives of all scheduled banks for taking necessary measures.
Under a syndicated loan arrangement, multiple banks or financial institutions jointly provide a loan facility to a borrower. This financing mechanism is generally used for large-scale funding requirements.
The central bank’s decision has created an opportunity for the five City Group companies to obtain syndicated working capital loans with a special exemption from the relevant legal provision.
