Bangladesh Bank Eases Credit Curbs for Two Beximco Firms Until December 2027

Conditional relief lets two businesses regain access to credit

Bangladesh Bank has relaxed lending restrictions for Beximco LPG Unit-1 and Shinepukur Ceramics, allowing the two Beximco Group businesses to access specified banking facilities until December 31, 2027. The decision includes renewal of Shinepukur's existing working capital limit of Tk 105 crore, equivalent to Tk 1.05 billion.

Beximco LPG Unit-1, a defaulting borrower at National Bank, can open letters of credit backed by a 100 percent cash margin and receive working capital financing. Shinepukur, a customer of state owned Sonali Bank, receives permission to renew the credit limit used to fund its regular operations.

Bangladesh Bank attached conditions intended to connect renewed financing with repayment of bank dues. Both businesses must deposit all their income into designated bank accounts, with money from those accounts used to make regular, proportionate repayments to their respective lenders.

The central bank also placed responsibility for the new facilities on the lending banks. National Bank cannot seek financial assistance from the government or Bangladesh Bank in connection with the LPG company's new facilities. For Shinepukur, the conditions exclude liability for the Finance Division and prevent Sonali Bank from seeking government financial assistance for the facility.

Bangladesh Bank said Shinepukur's concession was granted in the public interest. A senior central bank official, speaking anonymously, said the exemptions were intended to keep the companies' regular businesses running. The practical changes concern access to imports and money for daily operations, while the repayment conditions keep the banks' existing claims in view.

What legal restriction has been relaxed?

Section 27KaKa(3) of the Bank Company Act, 1991 bars banks and financial institutions from providing credit facilities to loan defaulters. A borrower in default has failed to repay money according to the agreed terms. The restriction can prevent that borrower from obtaining the banking support needed to continue trading.

Bangladesh Bank issued separate circulars for the two companies, using powers under Section 121 of the act to relax the restriction for the specified facilities. The exemptions run until December 31, 2027, giving the companies a defined period during which the facilities can operate under the stated conditions.

The central bank communicated the exemptions to the managing directors and chief executive officers of all banks. Each arrangement nevertheless concerns a particular company and its banking relationship: Beximco LPG Unit-1 with National Bank, and Shinepukur Ceramics with Sonali Bank.

The circulars were described as issued on Monday, while October 12 was also given as their issuance date without a year. The stated expiry date is December 31, 2027.

How the LPG business can resume direct imports

Beximco LPG Unit-1 can now open letters of credit with a 100 percent cash margin. A letter of credit is a bank's promise to pay a supplier when agreed conditions are met, such as submission of the documents required for a shipment. It is commonly used when a business buys goods from abroad.

A 100 percent cash margin means the company must provide cash equal to the full amount covered by the letter of credit. For a letter of credit worth Tk 10 million, that would mean putting up Tk 10 million in cash. The permission restores access to the bank's payment arrangement while requiring full cash backing.

Beximco's LPG business had been unable to open letters of credit following the fall of the Awami League government on August 5, 2024. It consequently bought raw materials from other domestic LPG companies to keep supplying the market. The new permission allows it to import those materials directly.

National Bank can also provide working capital, meaning finance for the costs of running the business, rather than a major new investment such as building a factory. For the LPG unit, access to banking facilities addresses the difficulty of continuing operations while subject to the legal restriction on credit.

Shinepukur gains renewal and a lower import margin

Shinepukur Ceramics receives renewal of an existing Tk 105 crore working capital limit through December 31, 2027. A credit limit sets the maximum amount available under a facility. The amount a company actually borrows depends on its use of that facility and the applicable banking terms.

Shinepukur can also open letters of credit with a 15 percent margin, reduced from 100 percent. For an import letter of credit worth Tk 10 million, the required margin would fall from Tk 10 million to Tk 1.5 million. That is Tk 8.5 million less cash tied up at the opening stage, although payment obligations remain under the facility.

A Beximco Group official, speaking anonymously, said Shinepukur's funded facilities had fallen from Tk 80 crore to Tk 35 crore after August 5. Funded facilities involve money actually advanced by a bank. The decline was Tk 45 crore, or 56.25 percent of the earlier amount, illustrating the scale of the reported reduction in available financing.

Bangladesh Bank's notification describes Shinepukur as a defaulting Sonali Bank customer. Another reported explanation is that Shinepukur had no default of its own but was treated as a defaulter because other Beximco companies had defaulted. The relief addresses the restriction applied to Shinepukur, while the explanation for its status remains contested.

Income must flow into accounts used for repayment

Beximco LPG Unit-1 must deposit all its earnings into a designated account, from which National Bank's dues must be repaid regularly on a proportional basis. Shinepukur faces the same type of requirement for repayment to Sonali Bank.

Routing earnings through a specified account gives the lender a defined channel for receiving repayments as the business earns revenue. The companies gain permission to use banking facilities, and their income must also support repayment of what they owe.

The repayment proportion and payment schedule have not been disclosed. Those details matter because they determine how much money goes to the bank and how much remains available for operating expenses.

National Bank's condition explicitly rules out liability for both the government and Bangladesh Bank arising from the LPG facilities. Shinepukur's condition places no liability on the Finance Division and prevents Sonali Bank from claiming government financial assistance. The arrangements put the lending decisions and the associated credit exposure with the banks concerned.

Board changes form part of the effort to restore operations

The Bangladesh Securities and Exchange Commission, or BSEC, had also approved changes to the boards of three listed Beximco companies: Beximco Pharmaceuticals, Beximco Ltd and Shinepukur Ceramics. The reconstituted boards exclude the group's vice chairman, Salman F Rahman.

Rahman, formerly private industry and investment adviser to ousted prime minister Sheikh Hasina, agreed in September to leave the boards of Beximco's listed companies. He has been in custody since August 2024 over multiple criminal charges.

Beximco sought approval for the board changes after consultations with the government and regulators. The stated purpose was to resolve a prolonged operational deadlock and restore regular business. Shinepukur is involved in both measures: changes to its board and renewed access to banking facilities.

The two regulatory actions address different parts of running a company. Board restructuring changes who oversees its decisions. Credit relief changes which banking facilities it can use. Together, they form part of the effort to keep the affected businesses operating.

A separate guarantee approval for Beximco Computers

Bangladesh Bank also permitted Beximco Computers on October 9 to renew a bank guarantee worth Tk 160 million, equivalent to Tk 16 crore, for supplying goods under four government projects. EXIM Bank had issued the guarantee and has since merged into Sammilito Islami Bank.

A bank guarantee is a promise by a bank to meet a covered obligation if its customer fails to do so. For a supplier working on government projects, it can provide the project authority with financial protection under the contract.

The central bank gave its no objection under Section 121 of the Bank Company Act, allowing the bank's board to renew the guarantee following the merger. The arrangement concerns contractual backing for goods supplied to government projects, rather than the import and working capital facilities granted to the LPG and ceramics businesses.

How the developments unfolded

August 2024 marks the start of the operational disruptions described for the affected businesses. Later measures addressed company leadership, project guarantees and access to bank financing.

• August 5, 2024: The Awami League government fell. Beximco LPG Unit-1 subsequently relied on domestic LPG suppliers after losing access to letters of credit.
• September, with no year specified: Salman F Rahman agreed to leave the boards of Beximco's listed companies.
• Before the latest credit relief: BSEC approved reconstituted boards for Beximco Pharmaceuticals, Beximco Ltd and Shinepukur Ceramics.
• October 9, with no year specified: Bangladesh Bank permitted renewal of Beximco Computers' Tk 160 million guarantee.
• December 31, 2027: The exemptions for Beximco LPG Unit-1 and Shinepukur Ceramics expire.

The immediate change is permission to use specified banking facilities under repayment and liability conditions. For the companies, that creates room to fund operations and arrange imports. For National Bank and Sonali Bank, the designated accounts make repayment from business income a central part of the arrangements.

Key Points

• Bangladesh Bank relaxed credit restrictions for Beximco LPG Unit-1 and Shinepukur Ceramics until December 31, 2027.
• The LPG company can open letters of credit with a 100 percent cash margin and receive working capital financing.
• Shinepukur's existing Tk 105 crore working capital limit can be renewed, with its letter of credit margin reduced to 15 percent.
• Both companies must channel all earnings into designated accounts and make regular, proportionate repayments to their banks.
• The facilities carry conditions excluding government financial support, with Bangladesh Bank also excluded from liability for the LPG arrangement.
• BSEC approved board changes at three listed Beximco companies, while Beximco Computers received a separate guarantee renewal permission.