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Serbia’s Kapital Bank asks Bangladesh to repay $2m

  • Published at 06:21 pm January 23rd, 2014

Kapital Bank of Serbia has asked Bangladesh to repay US$2m loan which were taken before Serbia broke up from Yugoslavia in 1992.

Yugoslavia’s Jugo Bank was renamed as Kapital Bank of Serbia after the break-up.

 Bangladesh’s government is now checking if the loan taken from Yugoslavia’s Jugo Bank is still valid after those long years and the secession. 

“We have asked the authority of Agrani Bank to check if the loan is still valid,” said a senior official of Bank and Financial Institutions Division.

The state-run Agrani Bank is part of the projects which have remained stalled since the break-up.

Economic Relations Division sent a letter to the banking division seeking information about the loans. 

“The contract was signed between Bangladesh and former Yugoslavia for a development project, not with Serbia’s Kapital Bank,” Dr Khondoker Bazlul Hoque, chairman of Agrani Bank.

He said: “We won’t recognise legal entities of Serbia’s Kapital Bank and Serbian firms.”  

In 1981, the government of Yugoslavia started a project titled “Dry dock and heavy steel structure” in Bangladesh. The contract of the project signed between two state-owned firms of former Yugoslavia - Milutionvicpimco and Brodimpeks - and Bangladesh’s state-owned firms Ship Building Corporation and Bangladesh Chemical Industries Corporation (BCIC).

The total cost of the project was $4.1m which taken from Juga Bank as loan. Chalna port authority and former Ship Building Corporation and BCIC repaid $3m of the amount as of June 30, 1990.

Later in 1992, the United Nations imposed sanction on financial transactions in Yugoslavia as civil war erupted in the country. In 1996, the UN lifted the sanction.

In 2012, Serbia’s Kaptial Bank sent a letter to Bangladesh’s Agrani Bank to repay rest of the loan.

Banking Division wanted to know from Agrani Bank that if Bangladesh’s government at that time gave any assurance to Yugoslavian government to repay the whole amount of the loans.

It also sought information about Ivn Milutionvic-Pimco whether the firm is the genuine successor of the Yugoslavia’s former state-owned firms Milutionvicpimco and Brodimpeks.

The division wanted to know when Jugo Bank was declared insolvent by commercial court of Belgrade.