After Beximco, now Nassa Group to get govt lifeline to keep factories running

Infograph: TBS

Highlights:

• Government intervenes to sustain Nassa Group factories and worker salaries
• Bangladesh Bank to allow back-to-back LCs despite defaults
• 25,000–27,000 workers risk unemployment if factories close
• Chairman Nazrul Islam Mazumder arrested, operations slowed, defaults increased
• Nassa Group owes Tk10,300 crore to 22 banks
• CID accuses Mazumder of laundering Tk781 crore abroad

The government is taking steps to help Nassa Group, one of Bangladesh's largest garment manufacturers, keep its factories operational and ensure thousands of workers continue receiving their salaries, following a similar intervention for Beximco Group. 

Although several companies within the group are classified as defaulters, authorities will facilitate the opening of back-to-back letters of credit (LCs) and provide policy-level assistance to sustain production.

Following an initiative of the Ministry of Labour and Employment, the Bangladesh Bank has taken this step at the request of the Financial Institutions Division, according to labour ministry sources.

Sources said that for back-to-back LCs opened at 100% margin, creditor banks will not be allowed to claim repayment for loans from proceeds. Funds will first be used to pay worker wages and cover other regular expenses, with any surplus applied to loan repayment.

A meeting was held yesterday at Bangladesh Bank with representatives from Nassa Group and seven of its financing banks. Sources said the central bank will soon issue instructions enabling banks to open back-to-back LCs for the group.

Khandakar Mohammad Saiful Alam, the group's vice chairman, told The Business Standard that the meeting discussed all operational aspects in detail. 

"Based on this meeting, Bangladesh Bank will decide the way forward. We hope all parties will act positively to protect thousands of workers, maintain export revenue, and keep factories running," he said.

He added that while wages have been paid up to June, the absence of back-to-back LCs has brought the group to a critical stage. "If the government and banks do not step in, workers will take to the streets."

Labour Secretary AHM Shafiquzzaman told The Business Standard that a policy-level decision had been made to help sustain Nassa Group's garment operations. 

"The company managed on its own for the past eight to nine months, but it is now unable to continue. Around 25,000 to 27,000 workers are employed in the group. If factories close, these workers will become unemployed, creating a serious risk of labour unrest," he said.

He explained that the central bank had been asked to intervene to ensure banks support normal operations. "When issuing loans, banks often ignored regulations. Now that companies are struggling, banks are enforcing rules that complicate their operations," he said. 

The secretary added that the ministry has been in touch with the group's brand buyers, who have given assurances of continuing orders. An advisory committee, tasked with boosting trade, industry, port activity, and revenue collection, has also endorsed the plan.

Bangladesh Bank assistant spokesperson Mohammad Shahriar Siddiqui told TBS that it has been discussed that the Group could approach the central bank through their banks for LC support for export-oriented garments. 

In a similar move, the government earlier intervened to assist Beximco Group in settling dues for its workers. On 6 March, the government allocated Tk525.46 crore to Beximco Group to clear the dues of its terminated workers. 

This financial support was provided to address the arrears of over 27,000 workers from 14 closed industrial units of Beximco Industrial Park.

Nassa Group's fallout

According to Nassa Group's website, founded in 1990, the group operates 34 factories, covering garments, textiles, spinning, logistics, product development, and quality control.

Nassa Group, mainly engaged in ready-made garments, also has real estate and banking interests. Chaired by Nazrul Islam Mazumder, former 15-year chairman of the Bangladesh Association of Banks (BAB) under the ousted Awami League, he was known for donating bank funds to the prime minister's relief fund.

After the Awami League government was toppled on 5 August 2024, multiple agencies took action against him. The central bank removed him as chairman of Exim Bank and the BAB, and the accounts of him and his family members were frozen. 

Mazumder went into hiding before being arrested on 1 October last year. He remains in custody.

A Nassa Group director, speaking on condition of anonymity, told TBS that operations slowed significantly after Mazumder's arrest. Many factories defaulted on bank loans, banks stopped opening LCs for the group, and buyers halted orders, leaving the group without new contracts.

The director said factory output has declined, with subcontracting sharply reduced. Salaries were paid up to June, but July payments remain pending. On 14 August, some workers protested over unpaid wages.

He further said the group plans to sell certain assets, which requires signatures from Mazumder in custody. The home ministry has been approached to facilitate this, though operations continue under authorised signatories.

Labour ministry's intervention

Sources said 25,000–27,000 workers are employed across Nassa Group's factories, requiring Tk40–42 crore in monthly wages. To prevent unrest and avoid factory closures, the labour ministry intervened.

On 17 July, a high-level meeting chaired by Labour Adviser Brigadier General (retd) Sakhawat Hossain was held to address the group's challenges. 

Secretaries from the Ministry of Labour and Employment, Finance Division, Financial Institutions Division, and the Deputy Governor of Bangladesh Bank attended in person, while representatives from BGMEA, various banks, industrial police, and Nassa Group joined online.

The labour adviser at the meeting said no industrial unit should be allowed to close, as shutdowns would damage the country's international image. "We must explore all possible measures to keep factories operational through maximum cooperation."

Meeting minutes reveal that nearly all Nassa Group companies have become non-performing borrowers in various banks, preventing access to credit under banking regulations. Even companies that are not defaulters now require Bangladesh Bank approval for loans.

BGMEA President Mahmud Hasan Khan said Nassa Group is entirely export-oriented. "Its business operations have remained uninterrupted, and the group's garments enjoy strong acceptance among domestic and international buyers. If management remains active, BGMEA will provide full support to resolve these challenges," he said.

Loans and defaults

Nazrul Islam Mazumder borrowed Tk10,300 crore from 22 banks and one financial institution on behalf of Nassa Group and affiliated companies, most of which are now non-performing. 

Data from Bangladesh Bank show the loans include Tk3,000 crore from Islami Bank, Tk1,200 crore from Social Islami Bank, Tk265 crore from Global Islami Bank, Tk1,961 crore from National Bank, Tk1,152 crore from IFIC Bank, Tk590 crore from Al-Arafah Islami Bank, and Tk458 crore from Shahjalal Islami Bank. 

Additional loans were obtained from several other banks, totalling thousands of crores.

Mosleh Uddin Ahmed, managing director of Shahjalal Islami Bank, acknowledged that the bank has loan exposure with Nassa Group but said the accounts are regular.

"We are facing trouble because some other Nassa concerns may have defaulted, and their respective banks have reported those to the CIB. We have applied to the Bangladesh Bank to review the matter," he told TBS.

He added that even in 2024, Nassa's exports handled through Shahjalal Islami Bank exceeded Tk900 crore.

Case against Mazumder

The Criminal Investigation Department (CID) has filed a money laundering case against Mazumder, alleging that he siphoned funds abroad using under- and over-invoicing, laundering hundreds of crores across the UAE, UK, Canada, Singapore, and Thailand. 

CID investigations also found that Mazumder transferred $3 million to the US through trade-based money laundering, using Firoza Garments Limited, a Nassa Group sister concern, between 2020 and 2024.

Mazumder faces charges of corruption, embezzlement, illicit asset accumulation, and money laundering amounting to Tk781.31 crore. 

In court on 22 July, he requested bail, pledging to repay all funds. He said that nearly 3 lakh people rely on his business and without his release, salaries could not be paid and operations would collapse. 

The judge advised patience and assured him of eventual bail.