SK Sur Chowdhury, deputy governor of Bangladesh Bank, poses with officials of 16 banks after signing deals at BB headquarters yesterday. Photo:BB
The central bank yesterday signed deals with 16 banks to extend low-interest loans to the jute sector in a bid to prop up the ailing industry.
The loans will be extended from the Tk 200 crore refinance scheme that Bangladesh Bank has created for five years.
All public and private sector jute mills, exporters and traders are eligible for loans from the fund, which will come at an interest rate of 9 percent, according to SK Sur Chowdhury, deputy governor of BB. The banks will receive the funds from the central bank at a 5 percent interest rate.
The state-owned and private sector jute mills can take 40 percent of their required funds as loans under the scheme, while the exporters and traders will get 20 percent.
The total loans given to the jute sector by the 16 banks stand at Tk 1,505 crore, a good portion of which has now become default due to a major slump in demand for its wares.
Stockpiles of jute goods hit a nine-year high of 1.69 lakh tonnes at the beginning of the fiscal year, according to the Department of Jute.
The jute industry, which involves about 40 lakh farmers and 1.5 lakh workers, has seen an acute downturn in its export earnings in recent times owing to the Middle East crisis and a slump in demand from Africa, Thailand and India.
Export receipts fell 20 percent year-on-year to $824 million in fiscal 2013-14, according to the Export Promotion Bureau.
Although the country has mandatory jute packaging rules, domestic sales of jute goods slipped 6.19 percent from a year ago to 1.06 lakh tonnes in fiscal 2013-14.
Failing to withstand the depressed international and domestic demands, nearly 20 mills have shut down in the last one year, and the ones that are still in operation have cut back on their productions.
The 16 banks with whom BB signed the deals are: Sonali, Janata, Agrani, Rupali, BASIC, UCBL, IFIC, National, Prime, AB, Mercantile, Uttara, Standard, One, The City and Bank Asia.