Rupali Bank clears $283m foreign loan of S Alam's power plant without BB approval

Infographics: TBS

The state-owned Rupali Bank has paid off $283 million in two instalments of SS Power Limited's foreign loan without Bangladesh Bank approval — a move the central bank says violates the loan agreement's terms.

The central bank has sent a letter to Rupali Bank seeking an explanation, a senior official of the bank confirmed the matter to TBS.

The power plant, located along the Bay of Bengal at Banshkhali in Chattogram, is jointly owned by S Alam Group and China's SEPCO III. S Alam Group Chairman Mohammad Saiful Alam Masud is the managing director of the plant.

In the letter, the Bangladesh Bank stated that Rupali paid the third loan instalment of $140 million (paid on 19 December 2024) and the fourth instalment of $143 million (paid on 23 June 2025) to the Bank of China's Singapore branch, without its approval.

The first and second instalments (total $243.76 million) were paid with the central bank's approval, while the first instalment was an automatic payment as per the agreement, and the second instalment was paid by Islami Bank with permission on 20 June 2024.

According to the Bangladesh Bank, $1,697 million loan was taken from the Bank of China for the plant's construction and power production until 2035. Of which, $575 million (principal and interest) has been repaid so far. 

Following the signing of an agreement between the Bangladesh Power Development Board (BPDB) and SS Power, former Bangladesh prime minister Sheikh Hasina and Chinese President Xi Jinping jointly launched the project in 2016.

A senior Bangladesh Bank official said, "Rupali Bank will have to seek Bangladesh Bank's approval to pay the fifth instalment. Approval will be granted once the application is submitted."

A senior Rupali Bank official told TBS, "The third and fourth instalment payments were sent to the correct account, but BB approval was not obtained due to a technical issue, not intentionally by Rupali Bank." 

"Receiving the central bank's letter, we are taking the matter seriously and will seek Bangladesh Bank approval before sending the fifth instalment," he added. 

According to him, fund transfers typically pass through multiple stages, including a foreign currency (FC) account where funds can be credited but not debited. As a result, the transaction was executed directly, bypassing the FC account.

The Rupali Bank official further stated that SS Power had financed all dollar purchases for the payments, and that every instalment so far had come from the company.

The Bangladesh Bank has not issued any formal statement in this regard.

Rupali Bank's explanation:

When contacted, Rupali Bank Managing Director Kazi Md Wahidul Islam said, "I cannot give you accurate details on this matter. I'm actually not in a position to explain it well. You may get clarification from the local office."

Later, Rupali Bank's communication department provided TBS with a written statement.

According to the bank, instalments of loans, approved by the Bangladesh Investment Development Authority (Bida), may be repaid without prior approval from the Bangladesh Bank. In the case of SS Power I Limited, the following arrangements/approvals were made:

Under the Accounts Agreement signed between Bank of China, Rupali Bank PLC, six other Chinese lending banks, and SS Power I Limited, a total of 10 accounts were opened for different purposes. Among these, two specific accounts — the Debt Service Reserve Account (DSRA) and the Debt Service Accrual Account (DSAA) — were designated to ensure transparency and reliability in project loan repayments.

The primary purpose of the DSRA is to maintain a reserve equivalent to one full instalment of the loan, which must be kept intact throughout the loan period. The DSAA, on the other hand, is designed to accumulate funds monthly so that the semi-annual instalments can be paid on schedule. On the due date, lenders automatically deduct the instalment amount from the DSAA. If funds in the DSAA are insufficient, the instalment is deducted from the DSRA, as stipulated in the Accounts Agreement.

Funds in the DSAA may only be used for loan repayment and cannot be used for any other purpose under the Accounts Agreement.

At the time of the first instalment, SS Power Limited was required to first build up the DSRA balance and then accumulate funds in the DSAA. For this purpose, the Bangladesh Bank approval was obtained to build the DSRA balance. However, by 19 December 2023, BPDB had not paid SS Power Ltd for electricity supplied, leaving the company unable to build the DSAA balance. As a result, lenders deducted an equivalent amount from the DSRA and treated it as the first instalment repayment.

Since the DSRA was designated solely to hold the equivalent of one instalment, replenishing its balance was treated as a reserve account top-up. The Bangladesh Bank approval was obtained to send US dollars to the DSRA for that purpose.

For the second instalment, a total of $101 million was paid through Islami Bank Bangladesh PLC. Because Islami Bank was not a party to the Accounts Agreement and had no Bida approval to remit funds for this purpose, the Bangladesh Bank approval was obtained for the second instalment.

For the third and fourth instalments, Rupali Bank PLC was unable to directly debit the FC account because it lacks offshore banking facilities and cannot conduct daily transactions in dual currencies. As the repayments had to be made within the agreed deadline, the bank deposited the 3rd and 4th instalments directly into the DSAA, following Bida's approval and Bangladesh Bank guidelines.