The Bangladesh Bank instructed state-run Sonali Bank to classify the Tk 106 crore loans taken by Orion Infrastructure Ltd as defaulted since the client repeatedly failed to repay on time.

The state-run bank was also asked to properly classify the loans by August 22 and report it to the Credit Information Bureau.

"We already requested the client to repay the loans immediately. If they fail, then we will classify it as a bad loan and inform the central bank," Md Afzal Karim, managing director of Sonali Bank, told The Daily Star yesterday.

A central bank document showed that Orion Infrastructure's outstanding loans were classifiable under the bad and loss category till December last year.

The company failed to repay four instalments till then.

However, the loans of the company were kept unclassified upon special approval from the central bank.

The central bank last year said Sonali Bank could keep the loans unclassified under the condition that the unpaid instalments would be cleared within May 2024.

Afterwards, a central bank inspection found that the client repaid only Tk 2 crore in cash and provided 15 cheques to repay over Tk 15 crore until July 11.

As a result, the bank showed the loans as unclassified as of June 30.

However, those cheques are yet to be encashed, so there is no scope to show the loans as unclassified, according to central bank instructions.

It said that the entire loans of the company are classifiable under the bad and loss category as there are outstanding instalments.

Sonali Bank disbursed the loans to Orion Infrastructure for the construction of Mayor Mohammad Hanif Flyover in Dhaka.

Till December last year, the company owed around Tk 30 crore as the principal amount and Tk 75.80 crore as interest, central bank documents showed.

Salman Obaidul Karim, managing director of Orion Group, told The Daily Star yesterday that some adverse business conditions had been created over the past few months, which resulted in the company being unable to pay on time.

"We have not defaulted on any payments yet to the best of my knowledge," he added.