A decade ago, leather was among Bangladesh’s most promising export sectors, second only to garments as a foreign exchange earner. But the industry has slumped into a persistent crisis since 2013. And this year, as in recent ones, disorder and fears of unfair prices again mar raw hide collection.

Tanneries typically receive bank loans ahead of Eid-ul-Adha to buy raw hides. In recent years, however, much of that lending has gone unrecovered. Most disbursed loans have soured, deterring banks from fresh lending to the leather sector and driving a steady decline in disbursements. Data from Bangladesh Bank and commercial lenders show that banks had set a lending target of BDT 6.44 billion for raw hide procurement in 2025, but only BDT 650 million was disbursed. That followed a mere BDT 1.25 billion in new loans in 2024.

Eid-ul-Adha falls on May 28 this year. The livestock ministry projects that more than 10 million cattle, buffaloes, goats and sheep will be sacrificed. The loan target for preserving these hides is just BDT 2.28 billion, but industry insiders warn actual disbursements could slip below BDT 1 billion, as they did last year.

Hide buyers and processors note the government has arranged salt supplies and other preservation measures. But they warn that without credit, the Eid period and the days that follow could again descend into chaos, leaving collectors unable to sell and facing losses.

Saturday was the final working day before a week-long public holiday for the festival. Several executives told Bonik Barta that many banks had still not finalised hide-purchase loan approvals for their clients as most borrowers in the sector were in default.

State-owned Rupali Bank has lent for hide purchases every year, but not a single customer has repaid on time. Its leather-sector loan book now stands at BDT 7.67 billion. Defaults account for BDT 4.53 billion and the bank rescheduled the remaining BDT 3.14 billion. Because no borrower meets the terms for fresh credit, Rupali’s board has decided to disburse no loans this year to the leather sector.

Agrani Bank, despite its own mountain of defaults, has set a target of BDT 910 million for the leather sector. Although its board approved the figure, officials doubt much will be released. “Our board approved BDT 910 million for hide purchases,” Managing Director Md Anwarul Islam told Bonik Barta. “The problem is that most traders in this sector are defaulters. That makes lending extremely difficult.”

The industry’s decline began in 2013, after tanneries moved from Hazaribagh to Savar, exposing deep structural weaknesses. The heaviest blow landed at Eid-ul-Adha in 2019. Government-set prices collapsed in the field. Raw hides sold for next to nothing; in some areas they were buried or dumped. Seasonal traders and wholesalers started abandoning the trade.

At the Savar Tannery Industrial Estate, the central effluent treatment plant never functioned properly, insiders say, leaving tanneries unable to meet international environmental standards. That failure has locked them out of Leather Working Group certification. Exports have suffered as a result: big global brands and buyers now largely shun Bangladeshi leather.

The export numbers tell a stark story. In the 2015–16 fiscal year, Bangladesh shipped $277.9 million worth of leather, according to the Export Promotion Bureau. A decade later, in 2024–25, that had collapsed to $128.2 million. Over the first ten months of the current fiscal year, July to April, exports reached only $108.3 million. The central bank puts total bank debt locked in the sector at BDT 150.28 billion.

Fearing a repeat of past turmoil, the government and Bangladesh Bank have taken several steps. The price of salted cowhide has been set at BDT 62 to 67 per square foot in Dhaka — up from BDT 60 to 65 last year — and BDT 57 to 62 outside the capital. Castrated goat hide was fixed at BDT 25 to 30 and goat hide at BDT 22 to 25 per square foot, both nationwide. The government also distributed free salt worth BDT 176 million to madrasahs, orphanages and Lillah boarding houses across the country for hide preservation.

Bangladesh Tanners Association President Shaheen Ahmed told Bonik Barta: “The government has taken several initiatives, including free salt. Tanneries are meant to collect and preserve the hides. We’re ready to do our part. But traders aren’t getting the loans they need. This crisis has persisted for years.”

Bangladesh Bank spokesperson and Executive Director Arif Hossain Khan said the central bank had eased loan rescheduling and directed banks to lend to the leather sector. “The problem is, under the law, no new loan can be given to a defaulter. We’ve instructed banks to offer the maximum relief possible within the legal framework.”