The Bangladesh Bank (BB) yesterday told the banks that they could provide fresh loans to subsidiary enterprises of a defaulting company after rescheduling loan, based on bank-client relationship.

"If such rescheduling is done based on understanding, the enterprise concerned will not be considered as loan defaulter and therefore, if the subsidiaries of that enterprise are regularly repaying the loans, these would not face any problem in receiving new loans." a BB circular said.

It further said complaints are being received that subsidiary enterprises of a group of companies which are regularly repaying loans are denied of the facility because of loan default by even only one of the companies. "For this, many people are expressing the concern that this would have an adverse impact on the economy," it added.

Bankers, however, said the new circular does not affect the Bank Company Act. But sources said the circular was given to encourage the banks to quickly reschedule loans of good parties.'

Meanwhile, Managing Director of Prime Bank Kazi Abdul Majid told The Daily Star yesterday that the managing directors of commercial banks present at the BB meeting Wednesday did not disagree on providing industrial loans.

"In fact, the commercial banks have been lending to the industrial sector, we are aware of the necessity of Industrial production and in fact, we pledged our support for providing industrial term loans." he

Majid said since banks do not have long term deposits, they welcome the government initiative to provide funds to the banks to facilitate disbursement of industrial loans.