Twelve Banks Withdraw Letters Of Credit To Bulk Oil Distribution Companies


Twelve major commercial banks in the country have decided not to issue letters of credit to bulk oil distribution companies as a result of the huge debts the BDC`s owe the financial institutions.  

A similar incident occurred in July last year when seven out of ten key banks withdraw the financing of petroleum product purchase, which led to acute shortage of fuel.  

They however, resumed the issuance of the letters of credit after government made payment of one hundred and fifty million dollars directly to the banks as part payment of its indebtedness to the BDC`s.  

According to the Chief Executive Officer of the Chamber of Bulk Oil Distributors, Senyo Hosi, the situation is frustrating, because it is becoming increasingly difficult for members to raise letters of credit to import petroleum products to serve the market.  

This was confirmed in an interview with a senior banking official.  

The source indicated that the current situation has become precarious and could possibly crush the entire banking sector.


SOURCE: GBC/ Daily Graphic