Central bank offers incentives to tanners

Bangladesh
Published:  03 November, 2014

The Bangladesh central bank on November 2 declared an incentive package for tanners to help them move their tanneries to the designated industrial park in Savar. Any tanneries which have already moved there from the toxic tannery hub of Hazaribagh or are under process to do so will get an opportunity to shift their irregular loans into block accounts and will have eight years for repayment, with a one-year grace period, the bank has said.

Tanners will be charged 10% interest on the loans in the block accounts or banks' cost of fund or whichever is lower.

"I hope banks will respond accordingly for the sake of the nation," Bangladesh Bank (BB) Governor Atiur Rahman told the local press.

The BB also allowed banks to consider relaxation of the existing down payment while rescheduling old loans or awarding new loans for tanneries involved in exports.

However, fresh collateral has to be shown in getting new loans if there is any deficit in security money.

Tanners will be able to free their collateralised property if they can show equal collateral. To take the incentives, tanners will have to begin the process of relocation within the next six months, the BB notice said.

The central bank is encouraging the relocation of tanneries as part of its efforts to promote green banking, the governor said. "The banks will ultimately reap the benefit."

The government has taken a number of initiatives and made investment to relocate the polluting tanneries from Hazaribagh. Bankers and tannery owners have welcomed the BB move.

Shaheen Ahmed, Chairman of Bangladesh Tanners Association, said: “It is a good initiative. The directive will accelerate the relocation process."

The industries ministry has already allocated plots on the 200-acre leather estate in Savar to 155 tannery owners through Bangladesh Small and Cottage Industries Corporation, a wing of the industries ministry that is implementing the project.

Industries Minister Amir Hossain Amu had earlier threatened to cancel the allocation if tanners fail to relocate the factories by March next year.

About 80 tanneries have started the process of relocation, according to the tanners' association.

The leather industry earned $1.29 billion last fiscal year, crossing the one-billion-dollar mark for the first time, according to Export Promotion Bureau. Exports of leather goods rose 48.6% year-on-year to $240.1 million during the period, leather 26.5% to $505.5 million, and footwear 31.2% to $550.1 million.

Source: The Daily Star

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