Central Bank allows S Alam's company to import materials with 100pc loan facility

Bangladesh Bank has allowed S Alam Group's company- SS Power-1 Ltd, a coal-fired power plant to import raw materials with 100% financing from state-owned Rupali Bank, effectively exempting the company from the usual requirement to maintain an import margin.

The central bank issued a circular on Sunday (August 16), allowing Rupali Bank to provide full financing for imports by SS Power-1 until December 2027.

According to the circular, the provisions of Section 26(Ka)(3) of the Bank Company Act will not apply to SS Power-1 during this period.

The decision came after Rupali Bank sought permission from Bangladesh Bank to allow the company, its client, to import raw materials against 100% bank financing. The company is reportedly facing a financial crisis and has become a loan defaulter.

Under normal banking rules, loan-defaulter companies face restrictions on obtaining fresh credit facilities and opening new letters of credit (LCs). Bangladesh Bank's latest decision effectively provides SS Power-1 with an exemption from the relevant statutory restriction for the specified period.

SS Power-1 operates a coal-fired power plant in Banshkhali, Chattogram, and is associated with S Alam Group, a business conglomerate that has faced allegations of large-scale loan irregularities and money laundering.

According to Bangladesh Bank data cited in the report, companies associated with S Alam Group have borrowed a total of around Tk 2.25 lakh crore from various banks, a substantial portion of which has reportedly become classified or defaulted loans.

The decision to allow 100% financing for imports has raised questions about the regulatory treatment of a company that is already in default, particularly as the banking sector continues to grapple with a high level of non-performing loans.