Apparel makers seek exemption from BB's new loan rules
Garment makers yesterday demanded to exclude the apparel sector from the central bank's new rules for loan classification, rescheduling and provisioning, as the country's highest foreign currency earning sector is passing through a critical time.
Bangladesh Bank issued two circulars on the rules of loan classification, rescheduling and provisioning on June 14, saying that an ongoing loan operation will be classified for non-repayment of any instalment within three months, instead of the six-month duration now in effect.
Term loans of five years have also been brought under the new regulation.
Leaders of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) and Bangladesh Textile Mills Association (BTMA) spoke at a joint press briefing at the BGMEA office in the capital.
BGMEA President Shafiul Islam Mohiuddin said it normally takes 120 days for repatriation of money from the exported goods, but the banking regulator reduced the period of Special Mention Account (SMA) to 60 days from 90 days.
“So, transferring the continuous loan and demand loan to SMA within 60 days is not logical,” he said.
He said the number of loan classified factories will increase with the move and banks will not be interested to give more loans to garment factories.
“The move will ultimately hamper investment flow in the private sector,” he said. He also indicated the low import of capital machinery at the garment sector at 28 percent and at 18 percent in the textile sector over the last nine months of current fiscal year.
"Wage hike for garment workers is an issue of the government. We are ready to discuss the issue when the government calls us.”
He said factory owners will face problems while paying workers' salary and running factories if they do not get adequate bank loans in time.
The country's apparel exports fell due to global financial meltdown, he said, adding that the sector is now suffering from perennial low pressure of gas and inadequate supply of power in the factories.
Apparel exports declined by 6.39 percent in March, 11.40 percent in April and 2.59 percent in May. He said frequent price hike of power will badly impact the garment sector.
BTMA President Jahangir Alamin and BKMEA President AKM Salim Osman also spoke.
Morshed Murad Ibrahim, president of Chittagong Chamber of Commerce and Industry, also made the same call through a letter to the Bangladesh Bank governor yesterday.