BRPD Circular No. 15: Loan Rescheduling of Leather Sector for the Purpose of Purchasing Raw Hides

Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh. Ref No.: BRPD Department: Banking Regulation and Policy Department 16 Asharh, 1429 BRPD Circular No. - 15 Date: ----------------- 30 June, 2022 Managing Director / Chief Executive All Scheduled Banks operating in Bangladesh Dear Sir, Regarding the provision of loan/investment facilities to leather traders for the purpose of purchasing hides of slaughtered animals on the occasion of the upcoming Eid al-Adha.

Almost all the raw materials used in the leather industry come from the hides of animals slaughtered on the occasion of the holy Eid al-Adha every year. During this time, it is necessary to ensure the supply of required raw materials to leather traders, thereby preserving the valuable raw materials of the larger national interest leather industry, and also to help improve the quality of life of the grassroots community directly involved in hide purchase and sale. However, it has come to our knowledge that many loans distributed for the purpose of purchasing raw hides of slaughtered animals in the past have remained unpaid due to problems prevalent in the leather industry as well as the long-term effects of COVID-19.

2. Considering the above issues along with the new increase in COVID infection, the war in neighboring countries, and the recent sudden flood situations in some areas of the country, the following guidelines should be followed to ensure the supply of required funds to leather traders (including tannery industries associated with raw hide purchase/sale/processing and all business establishments/industries in the leather sector) during the upcoming Eid al-Adha season:

(a) If any loan/partial loan previously distributed for the purpose of purchasing hides of slaughtered animals has become overdue, the bank may reschedule such overdue loan on a banker-customer relationship basis, subject to stock in the borrower's godown or alternative collateral, by collecting a minimum 2% down payment;

(b) Following the rescheduling, scheduled banks may distribute loans for the purpose of purchasing raw hides of slaughtered animals in 2022 on a banker-customer relationship basis, subject to verification of the borrower's capacity, in accordance with subsequent banking regulations;

(c) In the case of providing new loans for the purpose of purchasing hides of slaughtered animals in 2022, no compromised amount shall be collected;

(d) Efforts must be continued to ensure the proper distribution of loans allocated for the purpose of purchasing raw hides of slaughtered animals and to reach the grassroots-level hide purchase and sale programs;

(e) Banks operating on a Shariah basis may also invest for the above-mentioned purpose by following the above guidelines.

3. This facility will remain valid until 31 August, 2022.

4. These instructions are issued under the powers granted in Section 45 of the Bank Company Act, 1991, and will take effect immediately.

Yours faithfully,

(Maksuda Begum) Director (BRPD) Phone: 9530252