Govt to broker Tk165cr loan deal between in-jail Nassa Group chair and banks to restart factories
The group – heavily invested in ready-made garments and textiles – has been paralysed since the regime change in August last year
Highlights:
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Govt, banks plan Tk165cr loan to revive Nassa Group's closed factories
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Chairman Nazrul Islam Mazumder in jail since Oct 2024, consent needed at jail gate
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Nassa defaulted Tk8,677cr to 22 banks, with Tk11cr in July wages unpaid
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BB meeting decided loan release only if unencumbered assets pledged
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25,000 workers risk losing jobs, unrest feared without wage payment
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The government is working to mediate a Tk165 crore fresh loan package between several banks and the debt-ridden Nassa Group in a bid to restart its shuttered factories, clear dues, and protect nearly 25,000 workers' jobs, according to a Bangladesh Bank meeting decision.
But finalising the deal hinges on an unusual condition: a jail-gate meeting with the group's chairman, Nazrul Islam Mazumder, who has been behind bars since October last year.
Chairman in jail, factories in crisis
Nazrul, arrested in Dhaka's Gulshan on 2 October 2024 in multiple cases linked to the July uprising that toppled the Sheikh Hasina government, remains a key figure in Nassa's survival.
The group – heavily invested in ready-made garments and textiles – has been paralysed since the regime change in August last year. All factories remain closed, with unpaid bank loans exceeding Tk8,000 crore, utility arrears standing at Tk30 crore, and Tk11 crore in July wages pending.
To restart operations, Nassa has sought LC facilities and fresh loans from banks, but lenders have been reluctant due to its massive defaults. The group has also appealed for government support.
Unprecedented jail-gate deal
At a 17 August meeting at the Bangladesh Bank, officials decided that before releasing new loans, banks would meet Nazrul at the jail gate to secure his consent for loan recovery. He would be required to sign deeds allowing the sale of unmortgaged assets, which would serve as collateral against existing loans.
Banks have also sought unencumbered properties as security. If Nazrul agrees, lenders are prepared to release Tk165 crore to reopen factories, according to meeting minutes.
The meeting, chaired by Bangladesh Bank Executive Director Md Ashraful Alam, included government officials, lenders, and Nassa representatives. Following the decisions, Nassa applied to the home ministry for permission to hold the jail-gate meeting and to allow asset sale documents to be signed inside prison.
Nassa Group Vice Chairman Khandakar Mohammed Saiful Alam told TBS on 2 September, "The chairman's signature is not required for opening letters of Credit [LCs]. It is only needed if loans are taken against mortgages.
"As for banks' representatives meeting the chairman [at the jail gate], that depends on necessity. Applications regarding these issues have been submitted to the home ministry. We hope the government will certainly extend its cooperation."
Company law expert Senior Advocate Ahsanul Karim told TBS that under existing law, any signatures by a person in prison on deeds or mortgage documents would not be legally valid. However, if such signatures are made with the approval of the home ministry, they would be considered legally valid.
In court recently, Nassa Group Chairman Nazrul Islam said he would repay all bank dues if granted bail.
Tk8,677cr loan default
As of 30 June, Nassa owed Tk8,677 crore to 22 banks and one financial institution, including Tk1,621 crore to Islami Bank and Tk1,267 crore to IFIC Bank. Cross-loan exposures also exist between Nassa, S Alam Group, and banks like First Security Islami and Union Bank.
Since 4 June, the labour and home advisers, finance secretary, Bangladesh Bank, BGMEA, and bank representatives have held several meetings on reviving Nassa's factories, the latest on 17 August at Bangladesh Bank.
At the meeting, Nassa Group representatives said that due to legal complications, the owners cannot directly manage business operations, but the management committee is willing to keep the factories running.
Since the government change, the group has been unable to open LCs as a defaulting client, and until June 2025, workers' salaries were paid via subcontracting. There are no funds to pay July wages.
To resume production and pay workers, Nassa has applied for two-year back-to-back LCs from Islami Bank, IFIC Bank, Al-Arafa Islami Bank, Dutch-Bangla Bank, and Shahjalal Islami Bank, along with Tk165 crore in working capital loans.
In the BB meeting, a City Bank representative said that Nassa cannot repay loans from business income alone. Recovery is possible only if the owners' unencumbered immovable assets are sold to significantly reduce outstanding debt.
A Bangladesh Bank director from the Banking and Policy Division said that Nassa's huge loan exposure cannot be recovered through policy support alone; selling some unencumbered assets as down payments could help reschedule and recover the defaulted loans.
The meeting decided that Nassa Group will now apply to the banks to restart its factories. The banks will forward the application to the Bangladesh Bank, which will then send it to the finance ministry for approval. Once the ministry approves, the Bangladesh Bank will relay the decision back to the commercial banks, which will then implement it.
Nassa Group Vice Chairman Khandaker Mohammad Saiful Alam told TBS that, after the Bangladesh Bank meeting, Nassa has applied to eight commercial banks for LCs and other banking support.
He added that Shahjalal Islami Bank has already sent Nassa's application to the Bangladesh Bank for approval, while other banks are still processing their applications. It is expected that the remaining banks will soon seek Bangladesh Bank's approval as well. "We hope the LCs can be opened within this month," he said.
Tk11cr in July wages pending, risk of worker unrest
On 1 September, Nassa Group applied to Finance Adviser Salehuddin Ahmed for government assistance to pay outstanding worker salaries and utility bills and keep its factories operational.
In a letter signed by Vice Chairman Khandaker Mohammad Saiful Alam, the group explained that with its chairman in jail and other family members abroad, the management committee has decided to keep the factories running to protect workers' and industry interests.
The letter noted that since last December, banks have stopped opening all LCs for the Nassa Group, preventing it from receiving direct orders from foreign buyers. While some work continued through previous orders and subcontracting, there is currently no production.
Until now, salaries were paid by gathering funds from various sources, which is no longer feasible. Utility bills amount to nearly Tk30 crore, and July salaries alone total Tk11 crore, with no available means to pay them.
According to the letter, Nassa Group is fully export-oriented, operating garment, washing, embroidery, packaging, textile, fleece, and denim mills, employing around 25,000 workers and staff. It has 34 factories, according to its website.
