DHAKA, July 30, (v7n) – Bangladesh Bank (BB) has launched a Tk 2,000 crore pre-finance scheme to support the development and expansion of the country's leather and leather goods industry, aiming to boost exports, improve environmental compliance, and enhance competitiveness.
According to a circular issued today, the fund has been created from the central bank's own resources to help transform the leather sector into a sustainable, environmentally friendly, and globally competitive industry. The scheme will finance the construction and expansion of factories, procurement of machinery, and installation of environmental facilities such as Effluent Treatment Plants (ETP), Sewage Treatment Plants (STP), dumping yards, and solid waste management systems. It will also support compliance costs for obtaining Leather Working Group (LWG) certification, modernisation of existing tanneries, and the domestic production of chemicals, accessories, and other ancillary products.
Under the scheme, borrowers will receive loans at a maximum interest rate of 7%, while Bangladesh Bank will provide participating banks with refinance at 4%. The fund will remain in operation for three years on a revolving basis. Term loans for new factory construction will be available for up to seven years, including a two-year grace period, while modernisation loans will have a tenure of up to four years, including a six-month grace period. Working capital loans will be provided for one year and may be renewed for up to three years.
All scheduled banks can participate by signing agreements with Bangladesh Bank's SME and Special Programs Department. Loan ceilings have been set at Tk 30 crore for new leather processing facilities, Tk 20 crore for new leather goods manufacturing infrastructure, Tk 10 crore for modernisation of existing facilities, and Tk 5 crore for working capital for manufacturers of auxiliary products.
To promote sustainable production, Bangladesh Bank has attached several conditions: leather processing units must obtain LWG certification within two years of receiving financing, beneficiary institutions must ensure at least 10% of their electricity demand is met through solar power within the same period, and companies must adopt measures to eliminate occupational health risks for workers. Borrowers classified as defaulters under the Bank Company Act, 1991, and businesses already receiving support from the Export Development Fund or Green Transformation Fund for the same purpose will not be eligible.
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