Bangladesh's IFIC Bank Joins BDT 20 Billion Leather Industry Pre-Financing Program

en.Wedoany.com Reported - On September 16, IFIC Bank of Bangladesh signed a participation agreement with Bangladesh Bank, officially joining the BDT 20 billion pre-financing program for the leather and leather goods industry. Under the program, IFIC Bank may provide loans to tanneries, leather goods manufacturing enterprises, and related supporting industries, with a maximum end-borrower interest rate of 7%, and the specific loan amount for a single project or enterprise determined according to the type of investment.

The program was launched by Bangladesh Bank on July 30, funded by the central bank's own resources, and covers capital investment and working capital needs. The scope of support includes new tanneries, leather goods manufacturing units, cold storage for raw hides and finished leather, wastewater treatment facilities, solid waste disposal systems, and related infrastructure adopting clean technologies. The cost of funds obtained by participating banks from the central bank is 4%, and the maximum interest rate for end borrowers is 7%.

Financing limits are divided by project type. Among them, new tanneries or waste treatment facilities can obtain up to BDT 300 million in loans, new leather goods manufacturing units up to BDT 200 million, and upgrades and renovations of existing facilities up to BDT 100 million; working capital can also reach up to BDT 300 million, but the limit must be determined in conjunction with the enterprise's annual turnover. The maximum debt-to-equity ratio for project loans is 70:30, with a maximum term of 7 years, which may include a grace period of up to 2 years; working capital loans have an initial term of 1 year and can be extended for up to 3 years if operating and repayment performance meets requirements.

The program also sets environmental and compliance conditions. Raw hide processing enterprises are required to submit Leather Working Group (LWG) certification within two years after obtaining the loan, borrowing enterprises must source at least 10% of their electricity from solar power, and occupational health risk control measures must be implemented. Eligible Category B and Category C enterprises located in export processing zones may also apply for this financing, but defaulting borrowers and enterprises that have already received support from certain dedicated government financing programs are not eligible.

Following this signing, IFIC Bank has become one of the participating financial institutions in the program. The agreement was signed on behalf of both parties by Md Zabdul Islam, Director of the SME and Special Programs Department of Bangladesh Bank, and Syed Mansur Mustafa, Managing Director of IFIC Bank.