DHAKA: In a positive interference by the Bangladesh Bank, two private banks were compelled to pay the guarantee money to another private bank, said officials at the central bank.

They said BRAC Bank and AB Bank had to pay over Tk 165 crore to City Bank as they were guarantors of a loan disbursed against private mobile operator, Citycell last year.

The AB Bank was unconditional guarantor of Tk 38.50 crore while BRAC Bank of Tk 127 crore in case the Citycell failed to repay the loan. 

As the Citycell failed to make timely repayment of the short-term credit, the officials said, the City Bank asked BRAC Bank and AB Bank to pay it as guarantors.

“But, both the two banks showed dilly-dallying attitude although the guarantee clause showed that the guarantor banks shouldering responsibility will repay the loan payment within seven days the City Bank makes a claim,” said an official.

Sources at the City Bank said they had many corresponding with BRAC Bank and AB Bank to get back the defaulted loan of the Citycell and at one stage they were compelled to complain with Offsite Supervision Department of the Bangladesh Bank.

“The Offsite Supervision Department sent the matter to the central bank’s Financial Integrity and Customer Services Department for proper action,” said a central bank official informing “still the guarantor banks were showing dilly-dallying attitude.”

As the Bangladesh Bank warned both the BRAC Bank and AB Bank, the official confirmed that finally the banks made the payment on behalf of the Citycell that failed to repay the short-term loan

The AB Bank made a payment of Tk 38.50 crore to the City Bank on May 12 while the BRAC Bank on Sunday last.

“Yes, the central bank could successfully mediate a financial controversy between the private banks... Still it is not a good attitude that the BRAC Bank and AB Bank showed in making payment as guarantors of a loan,” said a top official at the Bangladesh Bank.

BDST: 1130 HRS, MAY 22, 2014