BB clears Tk 3,000cr syndicated loan for City Group despite default

The Bangladesh Bank has allowed five companies of City Group to obtain a fresh syndicated working capital loan of 3,000 crore taka, despite the business conglomerate being classified as a loan defaulter.

The central bank has relaxed Section 27Ka(3) of the Bank Company Act, 1991, to facilitate the financing, according to a notification issued on November 4, 2026.

The syndicated loan will be arranged under the leadership of City Bank, with the five City Group companies receiving the facility in the name of working capital financing.

The relaxation allows the proposed financing to proceed despite the legal restriction that would otherwise prevent banks from extending further credit to defaulting borrowers. 

The five companies named in the Bangladesh Bank notification are: City Seed Crushing Industries Ltd, City Sugar Industries Ltd, City Edible Oil Ltd, City Dal Mills Ltd and Shampa Flour Mills Ltd.

The exemption will remain effective until December 31, 2027, subject to several conditions imposed by the central bank.

Under the conditions, the government and Bangladesh Bank will bear no liability for the proposed financing and will not provide financial assistance to City Bank or other participating lenders in the syndicate.

City Group must provide unencumbered properties as registered mortgages against the loan to ensure adequate collateral.

The proceeds from selling goods purchased with the syndicated loan must be deposited into a designated bank account. The participating banks will receive priority repayment from that account on a proportionate basis.

The notification also requires the borrowing companies to purchase imported raw materials on behalf of the lenders' security agent and process them as custodians.

The notification was signed by Bangladesh Bank Deputy Governor Dr Md Kabir Ahmed.