State banks to lend more to tanners

State-owned commercial banks are set to disburse 14.71 percent more loans to tanners this year than the last to boost the leather sector.

Janata, Agrani, Rupali and Sonali, which account for 90 percent of the loans extended to the leather sector, plan to disburse Tk 608 crore this year.

Of the amount, Janata will disburse the most, of Tk 230 crore to 21 firms. Last year, it distributed Tk 250 crore. The reason for the reduced amount is that many firms' exports have shrunk since last year, said an official of Janata.

Sonali will dispatch Tk 175 crore, according to its Managing Director Pradip Kumar Dutta. Of the amount, Tk 122 crore has been already been given by renewing the loan ceiling of clients.

He said the bank has a policy of disbursing loans to customers with the condition that they relocate their tanneries to Savar.

Agrani will give about Tk 134 crore in loans this year, according to its officials.

The bank has a policy of giving loans to those who have good prospects, said Agrani Chairman Zaid Bakht.

Rupali will give Tk 69 crore to five companies this year.

A Rupali official said they are giving fresh loans to those who took loans last year and paid them back; the bank has also increased their loan limit.

Apart from the state banks, a few private ones including National Bank and City Bank will give small amounts of loans to tanneries this year.

At present, Tk 500 crore remains as default loans in the leather sector, most of which were granted in the 1990s.

As a result, the private banks do not show much interest in giving loans to the tannery sector.

Dutta said 15 companies have defaulted with Sonali and cases have been filed against many of them. Some of them have been given interest waiver under an exit policy.

The central bank made a guideline for giving loans to the leather sector about five years ago, said an Agrani official. The banks have been strictly following the policy and are subsequently facing much less pressure now.