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Banks’ guarantee limit eased for Padma project

  • Published at 07:58 pm June 9th, 2014

Bangladesh Bank has relaxed the banks in issuing guarantee beyond single borrower exposure limit to facilitate construction of Padma Bridget project.

The banks would now be able to issue guarantee, with immediate effect, to their clients who would be working for the project.

If the clients fail to perform their respective jobs, the banks will have to pay for the non-performing portion of the job as compensation, and the banks will realise the amount from their clients. Other than the project, the banks cannot issue guarantee beyond the limit.

 “The decision has been taken considering the significance of Padma Bridge in the national economy and the government’s priority in this project,” said a Bangladesh Bank circular issued yesterday.

According to earlier circular, the exposure limit, in case of both the funded and non- funded ones, to a single person and/or counterparty or a group shall not exceed 35% of the capital at any point of time.

The outstanding amount of exposure, both funded and non-funded, to a single person/counterparty or a group shall not exceed 35% of the capital at any point of time. 

The aggregate outstanding principal amount of funded exposures shall not exceed 15% of the capital at any point of time.

In case of export financing, the outstanding amount of exposure, both funded and non-funded, at any point of time to a single person/counterparty or a group shall not exceed 50% of the capital.

However, the aggregate outstanding principal amount of funded exposures shall not exceed 15% of the capital at any point of time.