State-owned commercial banks (SCBs) will increase loans to tanners by about 30 percent this year, as demand for sacrificial cattle on the eve of Eid is rising thanks to a break from the anthrax scare.
The state banks account for about 90 percent of the loans given to the leather sector before Eid-ul-Azha.
According to statistics, the banks will disburse Tk 311 crore loans this year, which was Tk 240 crore last year.
Officials of the SCBs said they are very strict in giving loans, and no credit will be granted to the defaulters.
Sonali Bank will distribute Tk 60 crore, Janata Bank Tk 150 crore, Agrani Bank Tk 76 crore and Rupali Bank Tk 25 crore.
Officials said leather business faced serious setback for several months due to the panic created by the spread of anthrax. The government has already lifted the anthrax alert across the country. As a result, the demand for raw hide during the Eid will increase much.
Managing Director of Janata Bank SM Aminur Rahman said the government has already lifted the red alert, which will increase demand for cattle this time.
"We are giving loans to good clients," he said.
The bank is strict with the defaulters, Rahman said, adding that the defaulters who took loans last year will be given the loans equivalent to the amount they defaulted on.
According to the statistics of the state banks, around Tk 400 crore has been stuck up in the tannery sector as default loans. Most of the loans were given in the first half of the 90s but could not be realised yet.
A high official of Sonali Bank said the tannery owners in the past used to start lobbying on the eve of Eid-ul-Azha and would create pressure on the banks for loans.
The official said the media also used to carry out propaganda that the banks were not giving loans to the tannery owners to buy rawhide and so leather was being smuggled out.
About five years back the central bank formulated guidelines for giving loans to the leather sector. The banks are now strictly following the policy in giving loans and facing much less pressure.
The Janata Bank MD said, in recent times the loans disbursed by them are not being defaulted. The amount defaulted now are the loans given earlier.
Bangladesh Bank (BB) officials said, although the overall export performance of the country was not good last year, the leather sector fared quite well. In terms of volume, leather exports rose 58 percent last fiscal year, while the rise was 27 percent in value, according to BB statistics.