Govt extends guarantee for Tk 3000cr on ICB loan by three years

The government has extended by another three years its sovereign guarantee for the Tk 3000 Cr loan given to the state-owned Investment Corporation of Bangladesh (ICB), allowing the institution more time to repay the fund without selling its shareholdings. The Ministry of Finance has already informed both Bangladesh Bank and ICB about the decision.

ICB Chairman Professor Abu Ahmed on Wednesday said the corporation sought the extension because a large part of the fund remains invested in the stock market. 

Repaying the loan now would force ICB to sell shares, while it does not have enough financial capacity to repay the entire amount immediately.
"The previous guarantee expired in May. The government has now extended it for another three years," he said.

Bangladesh Bank (BB) provided the Tk3000 Cr loan to ICB in November 2024 to ease its liquidity crisis and strengthen its ability to support the capital market. The government acted as the sovereign guarantor, meaning it would have to repay the loan if ICB failed to do so.

Of the total loan, around Tk 2000 Cr was used to repay expensive deposits and other financial obligations to investors, while the remaining Tk 1000 Cr was invested in the stock market.

According to Abu Ahmed, the Tk 1000 Cr investment is still making a profit.

The original government guarantee was valid for 18 months from the date the loan was disbursed. 
Under the guarantee terms, Bangladesh Bank cannot adjust any unpaid loan or interest from the profit it transfers to the government if ICB defaults.

Initially, the loan carried a 10 per cent interest rate, in line with the Bangladesh Bank policy rate. Later, following ICB's request, the central bank reduced the interest rate to 4 per cent.