Jute may not revive if loans misused

TO revitalize the lost glory of jute the central bank’s initiative of providing soft loans to the ailing jute industry in the country is admirable. A report carried in this newspaper said, Bangladesh Bank signed agreements with 16 banks to help jute mills under its Tk 200 crore refinancing scheme. All public and private sector jute mills, exporters and traders are eligible for loans from the fund created for five years at an interest rate of 9 percent. We are hopeful of reviving the once main component of our economy as use of jute is becoming imperative with the waking up dangers of climate change effect.
The central bank will provide loan to the banks at 5 percent interest rate and then the banks will charge highest 9 percent interest to provide the loans to borrowers. The state-owned and private sector jute mills can take 40 percent of their required funds as loans under the scheme, while the exporters and traders will get 20 percent. The refinancing scheme will run for 5 years. The agreements were signed between the central bank and Sonali, Janata, Agrani, Rupali, BASIC, UCBL, IFIC, National, Prime, AB, Mercantile, Uttara, Standard, One, The City Bank and Bank Asia.
According to the Department of Jute the stockpiles of jute goods hit a nine-year high of 1.69 lakh tonnes at the beginning of the fiscal year. The jute industry, which involves about 40 lakh farmers and 1.5 lakh workers, has seen an acute downturn in its export earnings in recent times owing to the Middle East crisis and a slump in demand from Africa, Thailand and India. However, the Export Promotion Bureau statistics said export receipts fell 20 percent year-on-year to $824 million in fiscal 2013-14. Although the country has mandatory jute packaging rules, domestic sales of jute goods slipped 6.19 percent from a year ago to 1.06 lakh tonnes in fiscal 2013-14. Failing to withstand the depressed international and domestic demands, nearly 20 mills have shut down in the last one year, and the ones that are still in operation have cut back on their production.
While expressing thanks to the central bank, we also feel worried about the possible misuse of the fund by the banks as many banks in several cases breach their accords and invest the soft loans on other sectors at higher interest rates. If the banks disburse loans to the targeted industry, it would revitalize the jute sector and thus helps the jute industry to come out from ailing condition and revives the lost glory of the once golden fiber.