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Rawhide loans target fall short

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Bangladesh Bank’s initiative to inject Tk 232 crore into the leather sector for rawhide procurement during Eid-ul-Azha has fallen short, with only Tk 125 crore disbursed to businesses, according to industry insiders.
Bankers attributed the shortfall to a lack of interest from leather traders in taking fresh loans, while industry sources pointed to a sharp increase in loan defaults, which has made banks more hesitant to lend to the sector.
As a result, tannery owners and seasonal rawhide traders have struggled to purchase adequate quantities of rawhide during the peak Eid season.
Stakeholders are now urging the authorities to ease loan conditions and relax documentation requirements ahead of the country’s largest rawhide collection period.
Although nine banks initially sanctioned Tk 232 crore in loans this year for rawhide purchases, only Tk 125 crore was ultimately disbursed. Entrepreneurs say this funding gap has seriously disrupted both the collection and processing of rawhide.
Sources noted that this year’s disbursed amount marks a sharp decline from previous years – Tk 270 crore in 2024, Tk 259 crore in 2023, Tk 443 crore in 2022, Tk 735 crore in 2021, and Tk 1,800 crore in 2019.
Md Shaheen Ahmed, Chairman of the Bangladesh Tanners Association (BTA), said, “Leather is a perishable item that must be collected and preserved quickly. Cash is essential to buy rawhide collected from various depots across the country.”
He explained that warehouses typically gather leather from seasonal traders during Eid, and while tannery owners operate with their own capital throughout the year, they require special financing during Qurbani to meet the surge in demand. “This year, the demand from banks was Tk 300-350 crore, but only Tk 125 crore was provided, which is far from sufficient,” he added.
Ahmed stressed that with adequate loan support, many problems in the leather sector could have been avoided. “The underprivileged would have received cash in exchange for rawhide, and we could have boosted foreign currency earnings through exports,” he said.
Bangladesh Bank Executive Director and Spokesperson Arif Hossain Khan confirmed that Tk 232 crore was targeted for lending this year. “Until the banks fully open, it’s hard to determine how much of the loans might eventually be waived,” he remarked.
He acknowledged that a portion of traders have failed to repay previous loans, resulting in a growing volume of defaults. “If traders borrow and fail to repay, banks will naturally be reluctant to lend again. A repayment mindset is essential to resolving this crisis,” he added.
According to the latest Bangladesh Bank report, the leather industry had an outstanding loan balance of Tk 12,628 crore as of December 2024, of which Tk 4,844 crore – around 38 percent – was in default.
The BTA represents around 800 members, including tannery owners and commercial exporters, while the country hosts approximately 1,866 large and medium-sized tanneries.
In addition, many small tanneries rely on seasonal entrepreneurs to collect rawhide during Eid-ul-Azha.
Tanner Anwar Hossain pointed out that although most rawhide is collected during the Eid season, poor logistical management leads to nearly 30 percent being wasted annually.
The leather industry, which earned around $1.13 billion in foreign exchange last fiscal year, plays a significant role in employment and national economic growth – highlighting the need for greater policy support.
Amjad Ali, a seasonal leather trader, said, “Banks only extend loans to tannery owners and exporters, ignoring others involved in the rawhide business. If funding had matched actual demand, a large portion of the leather spoilage could have been avoided.

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