Businessmen are not interested in fixing up prices of leather on the eve of Eid-ul Azha, as there is a dull trend of leather prices in the international market.
The leaders of different bodies associated with leather and leather goods business say such price fixation would caused a huge loss to them last year.
Presently, per square feet of high quality leather price is Tk75-80, medium grade leather Tk 50-60 and low quality leather Tk 40-50.
The authorities fixed up the prices of high quality leather at Tk100-110 per square feet last year.
Abu Taher, President of Bangladesh Finished Leather Goods and Footwear Exporters Association, told the Daily Observer: "We incurred losses round the year while exporting leather abroad. So, this year we are not interested to purchase leather at a fixed price to be determined by the government".
However, four public commercial banks (PCBs) will lend more than Tk 500 crore to the traders this year to purchase hides during Eid-ul Azha. The amount in this head last year was Tk 461 crore.
The PCBs that offer hides loan this year are Sonali, Janata, Agrani and Rupali Bank. However, specialised state-owned banks and private banks will also come forward to extend such support for the traders.
Officials in these PCBs said as many as 45 hide traders, including the exporters, have already sought a Tk 550 crore loan.
"The borrowers who had a track record of repaying loans on time will get priority in sanctioning loans this time," a PCB senior official said, adding that PCBs have been advised to remain alert so that loan defaulters are discouraged in this regard.
Classified or bad loans in hide's trade sector stood at Tk 450 crore at the end of 2014. In the last few years the amount of such bad debt was Tk 600 crore.
Another official pointed out that things have changed now, as defaulters are facing complaints in courts. "Genuine businessmen are now being benefited," he said.
He also said the hides traders will be entitled to borrowing half the amount fetched last year from exports of leather and leather goods.
A major portion of good quality hides come from sacrificial cows, buffaloes and goats. The people involved in the tannery industry remain busy during the Eid-ul Azha. Around 60 per cent of the annual demand of this industry comes from sacrificial animals. These hides are better than those collected in the time beyond this occasion.
Expressing his firmness against loans to defaulters, Sonali Bank's Managing Director Pradip Kumar Dutta said, "Under no circumstances, defaulters will be given loans."
Echoing Dutta's view, a Janata Bank high official pointed to the fact that necessary arrangements have been made to realise such bad loans through Artha Rin Adalat (loan courts).
The official also said every year banks contribute a lot in flourishing the tannery industry by offering loans to hides traders.
Like last year, Janata Bank has decided to advance Tk 200 crore loans this year. Instructions have been issued to all of its branches for finishing the process of loan sanction fast, the bank official added.
Sonali Bank, another PCB, has set a target of advancing Tk 140 crore loans, of which three hides exporting firms will get loans worth Tk 120 crore as per their demand, according to an official of the bank. The rest Tk 20 crore will be advanced to other businessmen across the country.
Meanwhile, the Agrani Bank Board of Directors has not yet passed the bank's policy with regard to loans for hides traders, another official added.
Agrani plans sanction of Tk 96-98 crore loans this year, the official said, pointing his finger at the bank's disbursement of Tk 91 crore loans for hides traders last year.
Rupali Bank has planned to raise hides loan to Tk 70 crore this time.
Former President of Bangladesh Tanners Association Harun Chowdhury has demanded that banks should raise the amount of such loans.
Chowdhury said, "There is a high demand of Bangladesh's leather worldwide. Bank loans help exporters a lot, but the amount should be increased."
On fixing of hides prices in Dhaka and outside, he said such price fixing is yet to be done but it will be done very shortly. "Last year 52 lakh pieces of cow hides were collected. The number of that will increase this year," he added.
Businessmen are given loans to buy hides at 15 per cent interest. Those who can process hides and export are given loans at a maximum 7 per cent interest.