Loan for raw hide investedin other trades every year

Syful IslamA portion of the total credit disbursed by the state-owned commercial banks (SCBs) at low rate of interest to the tanners for raw hide purchase during the Eid-ul-Azha every year is not used for the same creating scope for smugglers to take the advantage of liquidity crisis in the market, sources said. The SCBs provide the tanners with the loan for raw hide purchase at seven per cent interest rate which is much lower than any other types of loans provided by the banks. An intelligence agency recently informed the government that tanners do not utilise the entire loan for purchasing raw hides, instead they use a handful amount of the money for their other industries. It said that shortage of adequate liquidity in the hides market every year creates a crisis and the smugglers and their agents take the full advantage of the situation and procure a big portion of hides which they smuggle out through border districts after the Eid. According to the report of the intelligence agency, the banks disbursed Tk 3.71 billion for hide purchase last year of which a handful portion did not enter the market for the purpose. It feared the repetition of the same incident this year which will cast a negative impact on leather and leather goods industry. Sources said the SCBs have already started disbursing a portion of this year's loan amounting to about Tk 3.65 billion for purchase of raw hides. Four state run banks -- Sonali, Janata, Agrani and Rupali -- usually provide loan for the purpose. According to the report, some 20 to 25 per cent hides are being smuggled out every year during the Eid-ul-Azha through the frontier districts. It said that some 80 people are involved in raw hides smuggling in six border districts. Of them, 24 are in Joypurhat, 19 in Rajshahi, 10 in Jessore, 7 in Jhenidah, 7 in Kushtia and 20 in Satkhira district. The report has suggested the government to take necessary actions so that the entire disbursed money is utilised to buy raw hides during Eid-ul-Azha preventing the smugglers of taking the advantage of liquidity crisis. It also asked for increased vigilance in the border districts to prevent the smuggling out of hides to the neighbouring countries. Chairman of Bangladesh Tanners Association Shaheen Ahmed told the FE Wednesday that the amount disbursed by the SCBs for raw hides purchase is inadequate which creates scope for the smugglers to buy hides. "The SCBs disburse nearly Tk 4 billion in the market of Tk 20 billion which is very meagre," he said. Mr Ahmed claimed that the entire money is being used for hides purchase during the Eid-ul-Azha. "Bankers are now-a-days very much conscious about the use of their money and they grant loan on the basis of their relation with the customers."