BB Rejects MGI Proposal for $80 Million IFC Loan to Expand Shipping Fleet

Bangladesh Bank (BB) has rejected a proposal that would have enabled Meghna Group of Industries (MGI) to secure an $80 million loan from the International Finance Corporation (IFC) to acquire four new vessels, citing concerns over the risks associated with foreign currency-denominated borrowing.

According to central bank officials, foreign loans are subject to rigorous scrutiny as repayment obligations must be met in foreign currency. BB warned that any failure by borrowers to service such debt could create broader pressures on the country's financial system.

Arief Hossain Khan, executive director and spokesperson for Bangladesh Bank, said the central bank remains supportive of foreign direct investment and equity participation but exercises caution when it comes to external debt financing.

He noted that companies primarily focused on the domestic market may lack sufficient foreign currency earnings to repay overseas loans, increasing the risks linked to such borrowing arrangements.

The loan application was submitted through Modhumoti Bank, which sought a no-objection certificate (NOC) from Bangladesh Bank on behalf of MGI. The clearance was required because the company operates under the Bangladesh Economic Zones Authority (BEZA), where foreign borrowing is subject to central bank approval.

A senior BB official said the proposal was turned down after an assessment of the repayment risks involved.

Reacting to the decision, MGI Chairman and Managing Director Mostafa Kamal said the conglomerate had already obtained approval from the IFC after fulfilling all conditions set by the international lender.

He said the financing was intended to fund the purchase of four ships and maintained that the group generates sufficient foreign currency income to meet its repayment commitments. However, without the central bank’s NOC, the loan process cannot move forward.

MGI has been involved in international shipping since 2010 and currently operates a fleet of 145 vessels, including 110 owned ships.

The decision comes shortly after authorities approved another IFC-backed financing arrangement. At its 188th meeting on 29 April, the BIDA scrutiny committee on foreign loans and suppliers’ credit cleared a $30 million facility for Popular Pharmaceuticals.