Default loans in leather sector jumps to Tk1,541cr

At the end of March this year, the amount of defaulted loans in the leather sector stood at Tk1,541 crore, which is 12.57% of the total loans disbursed in this sector.

In December 2021, the amount of defaulted loans in the sector was Tk1,288 crore, said sources at the Bangladesh Bank.

People involved in this sector said the traders were not able to repay the loans as the leather sector hit a snag.

The banks have been acting very cautious as many traders became defaulters due to various reasons including the use of leather loans in other sectors.

At the end of March 2022, the defaulted loans of the state-owned banks stood at Tk1,370.62 crore, which is 19.23% of the disbursed loans. At the end of December 2021, the defaulted loan was Tk1,158.61 crore, which is 16.43% of the disbursed loan.

The default loans in private banks at the end of March this year stood at Tk126.52 crore, which is 2.55% of the disbursed loans. At the end of December 2021, the default in private banks was Tk85.63 crore, which is 1.85% of the disbursed loans.

At the end of March 2022, the defaulted loans of foreign banks in this sector stood at Tk44.28 crore, which is 24.24% of the disbursed loans. At the end of December 2021, the amount of defaulted loans in foreign banks was Tk44.27 crore, which is 23.98% of the disbursed loans.

At the end of March 2022, the total debt in the leather sector stood at around Tk12,264 crore. Of this, around Tk7,125 crore was disbursed by the state-owned banks, Tk4,955.76 crore by the private banks and Tk182.69 crore by the foreign banks.

Meanwhile, the demand for rawhide of the sacrificial animals has declined over the past few years. However, the price of rawhide has increased this year compared to last year. So, the tannery industry owners are seeking government help to get loans.

Public and private banks have set a target of disbursing Tk433 crore among the traders during the Eid-ul-Azha season. Of these, four state-owned banks will disburse Tk258 crore loan.

Meanwhile, on the occasion of Eid-ul-Azha, the Bangladesh Bank has provided a special facility to the traders who buy rawhide of the sacrificial animals.

The traders will be able reschedule their loans by paying with only 2% outstanding debt.