Bangladesh Bank (BB) has lifted the long-standing lending caps imposed on five key corporate branches of state-owned Sonali Bank PLC, allowing them to resume disbursing loans to large and eligible borrowers following proper scrutiny.

The central bank's decision removes all loan disbursement ceilings for Sonali Bank's Local Office, Foreign Exchange Corporate Branch, Shilpa Bhaban Corporate Branch and Shaheed Abrar Fahad Avenue Corporate Branch in Dhaka, as well as the Laldighi Corporate Branch in Chattogram. The restrictions were withdrawn after the bank submitted a formal request.

Earlier in June, Bangladesh Bank raised the lending ceiling for the bank's Local Office branch from 5 crore taka to 20 crore taka. Following another request from Sonali Bank in July, the central bank decided to remove all remaining lending restrictions on the five corporate branches. 

With the restrictions now lifted, all branches of the state-owned lender can process and approve loans for eligible clients in line with existing credit risk assessment guidelines.

According to sources, Sonali Bank sought the removal of the caps to improve credit flow to the private sector and better serve its major corporate clients.

In its application, the bank said many of its large and reputable customers maintain accounts with these five branches, but the lending limits had prevented it from meeting their financing needs. Bangladesh Bank later approved the request.

The central bank, however, instructed Sonali Bank to ensure strict due diligence before approving new loans and to remain cautious in dealing with controversial or high-risk borrowers.

A senior Sonali Bank official said the lending restrictions had forced the bank to turn away a number of creditworthy clients. The removal of the caps will now enable it to provide financing to qualified borrowers through its regular lending procedures.

The restrictions were originally imposed several years ago under a World Bank-supported reform programme for state-owned banks. Lending oversight was tightened further following the Hall-Mark loan scam.