Banks in Bangladesh are becoming increasingly reluctant to lend to the leather sector due to rising defaults. The amount of loans provided to the sector has been decreasing, while defaulted loans have been on the rise. At the end of March 2023, defaulted loans in the leather sector amounted to approximately Tk 1,600 crore. Banks are cautious about lending to customers who have a history of non-payment, resulting in a decrease in loan disbursements. The fear of default has led to reduced loans for purchasing raw hides. Some banks allocate funds for leather-related activities during Eid-ul-Azha, but only a small portion of the allocated money is distributed. To overcome the crisis in the sector, stakeholders suggest financing a significant portion of the outstanding loans in blocks. The leather sector’s ability to recover will be challenging if the amount of loans continues to decline.
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