Banks to lend Tk260cr to tanners during Eid

Highlights: 

• This year's loan amount is Tk184 crore less than that of last year
• Tannery owners asked for Tk500 crore loans
• But banks do not want to lend tanners most of their previous loans are in default 

Tanners will get about Tk259 crore loans from banks as capital aid to procure and preserve rawhides during the upcoming Eid-ul-Azha, the peak season for collecting skins and rawhides of sacrificial animals, according to central bank sources. 

According to commerce ministry sources, tannery owners have written to the ministry seeking a Tk500 crore loan facility. 

But banks do not want to lend to tannery entrepreneurs as a large part of their previous loans are in default, which is why they seek government assistance to get loans.

This year's loan amount, determined by the Bangladesh Bank, is Tk184 crore less than that of last year. 

A total of 12 public and private banks will disburse the loans among applicants with state-owned ones lending the maximum amount. 

Of the total amount, Sonali Bank will disburse Tk25 crore, Janata Bank Tk100 crore, Rupali Bank Tk35 crore, and Agrani Bank Tk80 crore. The rest will be disbursed by private banks.

Md Shaheen Ahmed, chairman of Bangladesh Tanners Association (BTA), told The Business Standard (TBS), "Hide is a perishable product, which needs to be collected and preserved quickly. Seasonal traders collect huge amounts of rawhides from different parts of the country during Eid — a process which requires a lot of effort and money."

"Usually, tannery owners do business with their own working capital, but they need more cash during Eid-ul-Azha when millions of animals are sacrificed," he said.

BTA is the apex body of leather sector entrepreneurs. Industry owners in this sector collect and process rawhides in tanneries.

After processing, some lathers are sold to industries linked to the leather industry and the rest are exported abroad.

According to the BTA, the organisation currently has around 800 members, including tannery owners and commercial exporters. There are 1,866 large and medium leather merchants across the country.

Beyond this, there are many agents who collect animal hides during Eid-ul-Azha from seasonal entrepreneurs.

Rawhides are collected and stored in the factories of Posta in the capital, Railway Bazar in Natore, Rajarhat in Jashore, Palashbari in Gaibandha, Taraganj in Rangpur, Naogaon, Mymensingh, Tangail, Kishoreganj, Cumilla, Chattogram, Aminbazar and Tongi-Gazipur.

Businessmen said the leather industry is a promising sector in terms of foreign currency earnings, national growth, employment and value addition. 

The majority of the rawhides of this industry are collected during Eid-ul-Azha. But about 30% of these hides get wasted every year due to a lack of proper management.

Leather exports on the rise

In 2017, the High Court ordered the transfer of tanneries from the capital's Hazaribagh to Sava's leather industrial city. Compliance issues and transfers have negatively impacted the sector, resulting in reduced exports.

But leather exports are gaining momentum in recent years.

Industry insiders said the demand for leather and leather products among foreign buyers is very good at the moment. Hence, government support is required to accelerate exports and maintain the current trend.

In the eleven months of the 2022-23 fiscal year, exports of leather products fetched $1,120 million, which is close to the target set by the government. In FY 2021-22, export earnings stood at $1,115 million.