Most borrowers did not repay the capital borrowed from Equity and Entrepreneurship Fund of the Bangladesh Bank in time as eight-year time frame for the repayment already expired and the projects disappeared.
According to the latest Bangladesh Bank and Investment Corporation of Bangladesh data, 229 projects, which borrowed capital of Tk 528.45 crore from the fund, were yet to repay Tk 348.32 crore even after the expiry of the time frame.
Bangladesh Bank officials said that the central bank had proposed the finance ministry some options including closure of the fund because of low recovery and disappearance of enterprises.
They said that political activists patronised by the government siphoned out the money from the fund having zero interest rate created by the government in 2000-01 financial year to patronise political activists.
The disbursement of the capital, however, began in 2004.
The capital was lent without any mortgage and the borrowers were given an eight-year time frame to repay the capital.
The central bank and Investment Corporation of Bangladesh are jointly operating the fund. The central bank makes policy and manages the fund while the corporation monitors the operational activities.
According to the data, 32 information and communications technology projects and 197 agricultural projects did not repay the capital although the repayment time frame already expired.
The 229 projects borrowed Tk 528.45 crore from the fund to develop their enterprises, but repaid the fund only 34.09 per cent or Tk 180.12 crore.
The ICT entrepreneurs did not repay Tk 27.72 crore and the agriculture entrepreneurs Tk 320.59 crore in time.
A central bank official said that the central bank and investment corporation had failed to trace the companies to recover the capital as false addresses were given in the applications.
The government disbursed Tk 1,342.94 crore against 872 projects as on September 30, 2016, but the recovery trend was unsatisfactory, the officials said.
The entrepreneurs of 827 projects repaid only Tk 227.93 crore as on September 30.
The fund disbursed Tk 1,241.81 crore in Agriculture sector and got only Tk 209.77 crore repaid by the entrepreneurs.
The entrepreneurs of ICT sector borrowed Tk 101.14 crore, but repaid only Tk 18.16 crore as on September 30, 2016.
A central bank official said, ‘The overall repayment trend in EEF is highly unsatisfactory…I fear that majority amount of disbursed fund will not be repaid.’
The investment corporation failed to file any suit with Money Loan Courts against the defaulters to recover the fund as the capital given to the entrepreneurs was not a loan as defined in the Money Loan Court Act 2003.
Against the backdrop, the central bank and the investment corporation stopped taking fresh applications for the fund on June 30, 2014.
Under the scheme, entrepreneurs have to invest 51 per cent of the capital of the project and the fund would provide them with the rest 49 per cent, central bank officials said.
A survey Bangladesh Institute of Development Studies conducted in 2014 found that at least 77 companies who borrowed capital of Tk 289 crore from the fund disappeared.
The central bank sent a letter to the finance ministry in August proposing to close the fund activities, a central bank official said.
The central bank proposed that the government might create a refinance scheme creating a separate company to deal with the fund if it desired to continue the fund.
The finance ministry is, however, yet to reply the central bank, the official said.
Investment corporation managing director Md Iftikhar-uz-zaman told New Age on Thursday that they had already prepared a draft policy for the fund considering the unsatisfactory recovery rate.
He said that the draft policy also proposed a provision for taking legal actions against defaulters.
He said, ‘The ICB has recently issued legal notices on some defaulters to recover the fund…We will file cases with the High Court to recover the money.’
The draft policy has already been sent to the central bank for scrutiny, he said.
Former interim government adviser AB Mirza Azizul Islam told New Age on Tuesday that the government should take initiative to recover the fund.
‘Politically connected people embezzled huge amount of money from the state-run banks. The BB and ICB should verify whether the politically connected people embezzled the money from the EEF,’ he said.
Central bank spokesperson Subhankar Saha and concerned executive director for the fund SM Moniruzzaman declined to comment.
Source: New Age
