The rawhide collected during the Eid-ul-Azha cater to much of Bangladesh’s demand of leather.
Bank and Financial Institutions Division officials said the rawhide loan target of the state-run banks were approved by the respective boards of directors.
The banks, however, said the rawhide traders would have to repay the loans taken in previous years before being eligible to get loans this year.
Many of the rawhide traders became default of loans as prices of rawhide dropped in the global market.
Data showed that leather prices declined 30-35% year-on-year in 2016 as non-leather footwear items gained popularity in international market.
According to the Bank Division sources, eight banks disbursed Tk664 crore loans among rawhide traders last year.
But most of the loans have not been repaid yet and the defaulters will not be eligible for loans this year, officials said.
However, the state-run banks will disburse loans to defaulters if they have already repaid 35% of the previous loans, a Sonali Bank official said.
The state-run four banks usually lend big amounts of money to rawhide traders. Sonali Bank sources said the three firms requested to Sonali Bank’s Bangabandhu Avenue branch for Tk170 crore loans to buy rawhide during the upcoming Eid-ul-Azha.
The Sonali Bank authorities already decided to provide the loans if the firms complied with the bank’s condition of repaying the said portion of previous loans.
The three firms last year borrowed Tk150 crore from the same branch. Janata Bank, another state-run commercial bank, disbursed Tk200 crore last year to rawhide trading firms. Two of the firms have not yet repaid the loans.
The bank’s board of directors has decided to disburse Tk250 crore rawhide loans this year while Agrani Bank will lend Tk150 crore. Last year Agrani Bank disbursed Tk130 crore as loans to rawhide traders.
Rupali Bank will disburse Tk60 crore loans among rawhide traders this year. It lent the same amount last year for the rawhide business.
Bangladesh Krishi Bank, a state-owned specialised bank, will disburse Tk4 crore for rawhide business this year, a decreased amount from the last year’s Tk6 crore.
Privately-run City Bank and United Commercial Bank have decided to give Tk20 crore and Tk18 crore loans respectively to rawhide traders.