Bangladesh Bank has relaxed conditions to avail new loans for raw hide traders ahead of Eid ul Azha, allowing them to access funds without having to clear their previous arrears.
The central bank issued a circular to this effect on Tuesday (May 5), prioritizing liquidity flow into the market before the festival, which accounts for the vast majority of the principal input (raw hide) for the export-oriented leather industry.
According to the new decision, the requirement for hide traders with rescheduled loans to pay a specific portion of their outstanding dues before availing fresh financing has been temporarily waived, specifically to facilitate the purchase of raw hides during the upcoming festive season.
The circular emphasizes that the leather industry is a significant export sector in Bangladesh, heavily reliant on the peak supply of raw hides collected during Eid-ul-Azha. Ensuring traders possess sufficient cash reserves during this critical time is essential for the smooth collection, preservation, and subsequent trade of hides, the central bank noted.
Consequently, banks have been directed to sanction and disburse required working capital loans to hide traders. The directive specifically highlights the need to extend credit not just to large-scale tannery owners but also to grassroots level collectors operating in villages and cattle markets.
The circular specifies that the mandatory upfront payment required from borrowers with existing rescheduled loans when seeking new financing for rawhide purchases is suspended until June 30, 2026. This move effectively enables numerous traders to secure fresh funds despite unresolved previous dues.
Furthermore, banks have been instructed to set specific lending targets for the leather sector for the fiscal year 2026. These targets must not be lower than the allocation made in the preceding year. Banks are required to submit their target figures and implementation reports to Bangladesh Bank by July 31.
Stakeholders and sector insiders expect this initiative to significantly ease the anticipated liquidity crunch in the raw hide market during Eid. By accessing financing on easier terms, traders can aggressively pursue rawhide purchases, which in turn is likely to help ensure a fair price for sacrificial animal skins at the producer and middleman levels.