The Bangladesh Bank has ordered state-owned Sonali Bank to classify a Tk 1.06 billion loan taken by Orion Infrastructure Ltd as defaulted following the company’s repeated failure to meet repayment deadlines.

In a directive issued by the central bank, Sonali Bank was instructed to properly classify the loan by August 22 and report the status to the Credit Information Bureau (CIB).

According to central bank documents, Orion Infrastructure’s loans were classified under the ‘bad and loss’ category as of December last year due to several missed payments. The company failed to meet four repayment installments during that period.

Despite this, the loans were kept unclassified, thanks to special approval from the central bank. Last year, the central bank permitted Sonali Bank to maintain the unclassified status of the loans on the condition that the overdue installments would be cleared by May 2024.

However, a recent inspection by the central bank revealed that Orion Infrastructure had only repaid Tk 20 million in cash while issuing 15 cheques to cover over Tk 150 million by July 11. Despite this, the bank continued categorizing the loans as unclassified as of June 30.

The central bank has pointed out that these cheques have not yet been encashed, thus negating any justification for maintaining the loans’ unclassified status. The regulator asserted that the entire loan amount, given the outstanding installments, is now classifiable under the ‘bad and loss’ category.