The Bangladesh Bank (BB) has sought government approval to allow Abdul Monem Sugar Refinery Limited to open letters of credit (LCs) at a 100% margin until June 30, 2027, despite the company being classified as a loan defaulter.
Central bank officials said the move aims to keep the refinery operational by ensuring continued import of raw materials.
Abdul Monem Sugar has been classified as a defaulter as it serves as the corporate guarantor for a defaulted loan of around Tk455 crore taken by Abdul Monem Limited, the flagship company of Abdul Monem Group, from state-owned Agrani Bank.
Under the Bank Company Act, 1991, guarantors of defaulted loans are also treated as defaulters and are not eligible for new loans or LC facilities. However, the law allows Bangladesh Bank, in consultation with the government, to exempt individuals or institutions from such restrictions.
Exercising that authority, the central bank on June 16 sent a letter to the Financial Institutions Division under the finance ministry seeking approval for the facility.
Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said the central bank had sought the ministry’s opinion in line with the law.
“If the finance ministry thinks they can be provided with this facility and grants approval, only then can we exempt them from the restrictions. If the ministry does not approve, we will not give them this facility,” he told the media.
According to Bangladesh Bank data as of March 2025, Abdul Monem Limited has defaulted loans of Tk698 crore across 24 banks and non-bank financial institutions, including Agrani Bank, IFIC Bank, United Commercial Bank and Dutch-Bangla Bank. Of this, around Tk455 crore is owed to Agrani Bank.
In August last year, Abdul Monem Group applied for restructuring the loans under special conditions.
The request for the LC facility was submitted to Bangladesh Bank Governor Mostaqur Rahman on June 7.
In its application, the refinery said several international agreements for importing raw sugar are still active and failure to open LCs could lead to compensation of around $23,000 per day.
It also said only a limited number of sugar refineries are operating at full capacity and any disruption could affect domestic sugar supply.
The refinery is currently operated by Abul Khair Limited under an agreement to acquire the business. Sugar produced at the refinery is marketed under the brand name “Starship Sugar”, though the ownership transfer is yet to be completed.
ASM Mainuddin Monem, managing director of Abdul Monem Group, said Abul Khair Group, as the buyer, will repay the company’s bank and bond liabilities.
“This situation has been created due to not receiving any cooperation from Agrani Bank. Because Agrani Bank was not informed beforehand about the sale of the refinery, they are not cooperating with us in any way,” he said.
He added that Agrani Bank has become concerned about the implications of ownership change on loan recovery.
As a result, the company sought Bangladesh Bank’s intervention to allow LC openings at a 100% margin so refinery operations can continue.
On the group’s overall condition, he said banks have not provided fresh financing for a long time.
“No bank has given a loan in the last 18 months. Construction work has also decreased. The business situation is not good,” he said.
Founded in 1956 by late industrialist Abdul Monem, the group expanded into construction, food processing, beverages, pharmaceuticals, energy and other sectors. The sugar refinery was established in 2007.
After Abdul Monem’s death in 2020, several group companies faced financial difficulties amid rising borrowing costs, currency depreciation and a slowdown in major government infrastructure projects.
Courtesy: The Business Standard
Bd-Pratidin English/ AM
