BB lifts credit ceilings on 5 key Sonali Bank branches

Bangladesh Bank (BB) has removed the long-standing caps on loan disbursements across five crucial corporate branches of state-owned Sonali Bank PLC, allowing them to resume lending to large and eligible borrowers upon thorough scrutiny.

The central bank's decision fully eliminates 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, and the Laldighi Corporate branch in Chattogram. Following a recent application, the central bank has withdrawn the embargo.

Before this directive, these branches faced strict credit restrictions, with loan caps ranging between Tk 5 crore and Tk 20 crore depending on the branch.

Following the removal of these barriers, all branches under the state-owned lender are now empowered to process and issue loans to qualified clients in accordance with standard risk-assessment guidelines.

According to sources, Sonali Bank had formally requested Bangladesh Bank to withdraw the restrictions to boost credit flow to the private sector and better cater to major corporate clients.

The bank explained in its application that while most of its high-value, reputable clients maintain accounts with these five key branches, the credit ceilings prevented the bank from meeting their financial requirements. The central bank subsequently approved the request.

However, Bangladesh Bank instructed the commercial lender to strictly enforce proper due diligence during new loan approvals and maintain strong caution against controversial or high-risk borrowers.

A senior official at Sonali Bank noted that the credit caps previously forced the bank to turn away many creditworthy clients. With the limitations lifted, the bank can now process loans for eligible applicants through standard procedures.

The lending restrictions were originally imposed on these key branches several years ago as part of a state-owned bank reform programme supported by the World Bank. Surveillance and credit controls were further tightened in the wake of the landmark Hall-Mark loan scam.

Earlier in June, Bangladesh Bank relaxed the ceiling for the Local Office branch, raising its lending limit from Tk 5 crore to Tk 20 crore. Following a subsequent request submitted by Sonali Bank in July, the central bank decided to lift all remaining restrictions across the five branches.