Bangladesh Bank has invoked its statutory powers to temporarily suspend a key banking restriction for Abdul Monem Sugar Refinery Ltd (AMSRL), allowing the company to open import letters of credit (LCs) with 100 per cent cash margin until 30 June 2027.
This central bank decision came despite the refinery’s links to one of Bangladesh’s larger corporate loan defaults.
The exemption, announced in a circular issued on Monday, suspends the application of Section 27AA(3) of Bank Company Act, 1991 in the refinery’s case. Under the law, loan defaulters and the guarantors of defaulted loans are barred from obtaining new credit facilities, including opening import LCs.
The decision effectively removes the legal obstacle that prevented the refinery from importing raw sugar after it became ineligible to open new LCs as the corporate guarantor of a defaulted loan.
Bangladesh Bank said the exemption would apply only to import LCs backed by 100 per cent margin. It also stipulated that neither the government nor the central bank would bear any liability arising from such facilities and that banks extending them would not be entitled to seek financial support from either institution.
The regulatory relief comes even though Abdul Monem Ltd., the flagship company of Abdul Monem Group, had Tk698 crore in classified loans across 24 banks and financial institutions as of March 2025, according to Bangladesh Bank data. Nearly Tk455 crore of the total is owed to state-owned Agrani Bank.
Although Abdul Monem Sugar Refinery is not the direct borrower, it is the corporate guarantor of a defaulted Agrani Bank loan taken by Abdul Monem Ltd. Under the Bank Company Act, guarantors of defaulted loans are treated as defaulters, making them ineligible for new credit facilities or import LCs.
The group first applied in August last year to restructure its defaulted loans under special conditions. It later submitted a separate application to Bangladesh Bank Governor Md Mostaqur Rahman on 7 June this year seeking permission to open import LCs with full cash margin despite the statutory restriction.
The request followed concerns that the refinery would be unable to continue importing raw sugar unless the restriction was lifted.
Bangladesh Bank subsequently sought the government’s approval before granting the exemption. On 16 June, the central bank wrote to the Financial Institutions Division of the Ministry of Finance requesting permission to provide the special facility under powers available in the Bank Company Act.
At the time, Bangladesh Bank spokesman and Executive Director Areif Hossain Khan said the central bank had sought the ministry’s opinion as required by law.
According to the company’s application, several international contracts for importing raw sugar remain active and failure to open the required LCs could expose the refinery to contractual penalties of about $23,000 a day.
The company also argued that only a limited number of sugar refineries are currently operating at full capacity in Bangladesh and that any disruption to its imports could affect domestic sugar supplies.
The refinery is currently being operated by Abul Khair Ltd under a purchase agreement, with its products being marketed under the “Starship Sugar” brand, although the formal transfer of ownership has yet to be completed.
Earlier, Abdul Monem Group told the media that Abul Khair, as the buyer of the refinery, would assume responsibility for settling the company’s bank loans and bond liabilities.
The group said banks had become concerned about recovering their loans following the ownership transition, prompting it to seek Bangladesh Bank’s intervention to keep the refinery operational.
The group also said banks had not provided it with fresh financing for the past 18 months, adding that a slowdown in construction activity had further weakened its overall business.
Founded in 1956 by late industrialist Abdul Monem, the group expanded into construction, food processing, beverages, pharmaceuticals and energy over several decades. The sugar refinery was established in 2007.
Following Abdul Monem’s death in 2020, however, the group came under increasing financial pressure.
The latest exemption underscores Bangladesh Bank’s attempt to balance enforcement of banking discipline with maintaining the import of an essential commodity, while raising broader questions among sector insiders about how similar requests from other defaulter-linked companies may be treated in the future.
