EBL and SME Foundation to stand by leather goods makers
Eastern Bank Ltd (EBL) and The SME Foundation plan to sign a deal soon to jointly stand by a group of small leather goods makers to help develop a cluster in Mirpur in Dhaka, officials said.
Under the deal, SME Foundation will provide Tk 1 crore at an interest rate of 4 percent to EBL under credit wholesaling. The bank will charge an interest rate of 9 percent for cluster development, said Md Khurshed Alam, who heads the affairs of small and medium enterprises of EBL.
Top officials from both institutions met recently at the headquarters of the SME Foundation in Dhaka to discuss the issue.
The deal is expected to be signed after Eid-ul-Fitr.
The SME Foundation has selected to financially support 30 Mirpur-based leather goods makers, who supply products to Aarong, the country's largest fashion house owned by the non-governmental organisation BRAC.
PRICE (Poverty Reduction by Increasing the Competitiveness of Enterprises), an USAID-funded economic development project in Bangladesh, has agreed to assist the project.
Since 2008, the PRICE-run project has been working in Bangladesh with the goal of reducing poverty by enhancing competitiveness in the aquaculture, horticulture and leather sectors.
PRICE will offer factory development and automation assistance, while Aarong will help design products and facilitate marketing.
PRICE has been working with the leather product makers, including the suppliers associated with Aarong, for a long time now.
“PRICE has been working to make the suppliers bankable,” Alam said.
He said these suppliers have been making leather products for seven to eight years now, even under brand names, but they do not have any trade licences.
“We sat with PRICE to help the manufacturers obtain their trade licences, pay their taxes and open bank accounts. We also sat with Aarong to verify their association with the fashion house.”
Alam said Aarong provided credit facilities to these suppliers, but for insignificant amounts.
He said EBL would provide working capital and capital to buy machinery. Depending on their requirements, the amount will vary between Tk 2 lakh and Tk 15 lakh.
The SME Foundation will make low-cost funds available for the suppliers. “In addition, we will arrange training to help develop their skills, design and colour sense,” said an official of the foundation.
“Our aim is to help the suppliers so that they can deliver quality products and cut import dependence,” the official added.
These suppliers manufacture all types of leather products, including bags and shoes.
EBL distributes about Tk 800 crore to Tk 900 crore a year at present. The number of its SME clients currently stands at 4,500.
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