Rawhide traders can reschedule loans with 2pc down-payment
Economic Reporter :
The Bangladesh Bank (BB) offers special loan rescheduling facility to the defaulters of the leather industry, a promising sector in terms of national growth, employment, foreign exchange earnings and value addition.
As part of the facility, rawhide traders will be able to reschedule their loans with a two per cent down payment ahead of the Eid-ul-Azha.
The Banking Regulation and Policy Department of the BB outlined the special facility in a circular issued on Sunday and the traders can apply for availing the facility until July 30.
The central bank has already directed banks to reschedule loans taken by tanners or rawhide traders ahead of upcoming Eid.
The central bank said that the directive will be implemented subject to a minimum two per cent down payment of the customer's loan or investment status in cash.
The circular has been sent to the Managing Directors and Chief Executives of all scheduled banks operating in Bangladesh, a BB official said.
According to the circular, banks will be able to decide on their own on the basis of banker-customer relationship whether to reschedule a minimum two per cent down payment of the loan balance based on cash.
The condition for disbursement of the compromised new loan for purchasing raw hides of sacrificial animals can be relaxed, the BB circular added.
Necessary financial assistances for traders involved in leather management will be ensured during the upcoming Eid-ul-Azha to harness the huge potential of the leather industry, said Industries Minister Nurul Majid Mahmud Humayun.
The minister said this while presiding over the second meeting of the task force formed for the development of leather industry in the country on June 22.
He said that the price of rawhides and salted hides would be determined considering Covid-19 situation and interest of traders involved in the leather industry, which will enable them to purchase and store enough leather.
Besides the loan rescheduling facility, the four state-owned banks provide credit facility for purchasing rawhide on the eve of the Eid, the biggest supply season of the item, every year.
About half of the year round supply of raw materials used in the leather industry comes from animal skins sacrificed every year during the holy Eid-ul-Azha.
But due to various reasons past loans have not been repaid by tannery owners and some loans are being classified as bad and doubtful. As a result, it is not possible to maintain normal credit or investment flow in this sector in many cases. The country has major advantages in developing its leather industry. Leather from Bangladesh is highly reputed for its good quality, and leather goods and footwear factories are increasingly becoming able to meet the high demands of foreign buyers.
The leather industry has the potential to develop the entire supply chain-starting from raw leather to leather processing, to production of footwear and leather products, domestically.