Why does labour ministry want BB to bail out Deshbandhu Group?
Currently, its RMG factories are operating at only 25% of their capacity due to a critical shortage of working capital and the inability to open new back-to-back LCs.
The Ministry of Labour and Employment has urged Bangladesh Bank to urgently facilitate loan rescheduling, provide essential working capital and reopen back-to-back letter of credit (LC) facilities for factories under Deshbandhu Group, citing concerns over the conglomerate's operational survival and the welfare of its thousands of workers.
Several factories under the group, which employs around 25,000 workers across five export-oriented ready-made garment (RMG) units, have reportedly halted production since the political transition following the fall of the Hasina regime in August 2024.
Currently, these units are operating at only 25% of their capacity due to a critical shortage of working capital and the inability to open new back-to-back LCs.
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In a letter to Bangladesh Bank Governor Ahsan H Mansur on 14 October, the ministry stressed the group's significance to the national economy, saying several factories are shut due to a lack of raw materials and working capital.
The ministry warned that without immediate intervention, the financial crunch could spark labour unrest.
Ghulam Rahman, managing director of Deshbandhu Group, told TBS that the export-oriented factories, which previously generated $50 million in annual exports under normal operations, are now unable to reach even a quarter of that figure.
He claimed that the banks and financial institutions with which the group maintained regular business ties ceased transactions over a year ago, eventually declaring the group a defaulter.
He further alleged that their repeated requests for debt rescheduling and business renewal have been met with a negative response, leading to the current crisis.
The managing director said Deshbandhu Group borrowed Tk13,787 crore from various banks between 2005 and 2024, of which Tk12,765 crore has been repaid, adding that the outstanding principal loan amount (excluding interest) is now only Tk1,278 crore.
An audit report by the international audit firm Ernest & Young reportedly assesses the Deshbandhu Group's total assets at approximately Tk14,000 crore.
Rahman said the entire crisis could be resolved if banks provided Tk2,000 crore in working capital and the requested loan rescheduling facility.
