Barapukuria accuses Rupali Bank of ‘fraudulence’ over LC opening

The Barapukuria Coal Mine Company Limited (BCMCL) has accused Rupali Bank Ltd of "fraud-like conduct" alleging the bank had breached an agreement in opening a letter of credit (LC).

BCMCL, a subsidiary of the state-owned Petrobangla, recently sent a letter to the bank urging it to immediately open the LC in accordance with the agreement the two parties had earlier agreed upon for the sake of avoiding a load shedding disaster in the upcoming irrigation months.

The letter, signed by Gopal Chandra Saha, general manager (Finance & Accounts) of BCMCL, was sent to Rupali Bank’s corporate branch in Dinajpur’s Nimtola on March 7.

According to the letter, on December 28, Rupali Bank Ltd accepted a BCMLC offer to open a revolving LC of $12 million with zero margin and 0.03 percent commission to import coal from a Chinese company.

As Rupali Bank was stalling on opening the LC, representatives of the two parties met on February 20 this year and decided to expedite the process.

However, on March 3, Rupali Bank sent a letter to BCMCL demanding a deposit of Tk 2,260 crore as a security guarantee.

On top of that, the bank demanded a deposit of at least Tk 400 crore as Special Notice Deposit (SND) that would remain with the bank during whole the tenure (six years) of the contract with the Chinese company.

The state-owned commercial bank also demanded that BCMLC signs a memorandum of understanding with Rupali Bank.

In reply, BCMLC’s letter in the review said the new demands are tantamount to “fraudulence” which hurts a vital government activity.

BCMLC informed that the company had previously made three import payments through other state-owned banks without any of the conditions demanded by Rupali Bank.

The letter further stated that BCMCL imports vital coal that are supplied to a 525MW power plant nearby, and this issue with Rupali Bank is causing disruption in the supply.

Sounding the alarm, the letter said the issue may result in a load shedding disaster for northern regions of the country ahead of the irrigation season.

BCMCL is also mulling taking the matter to the ministries concerned and taking legal and financial measures against the bank for disrupting vital government activity, the letter warned.

Rupali Bank’s action is “completely unethical” and it is delaying coal extraction, vital for electricity generation, Engr Md Kamruzzaman Khan, managing director of BCMCL, told the Business Insider Bangladesh.

BCMCL has already informed the matter to senior officials Petrobangla and Rupali Bank, he said adding that it is in talks with Agrani Bank as an alternative. “The bank has shown interest in working with us.”

Chinese company XMC-CMC has a six-year agreement worth $262.57 million to operate the Barapukuria coal mine which is owned by BCMCL.