The central bank has stepped in to help the government implement the jute packaging law, which remains pending due to resistance by traders.

Bangladesh Bank yesterday asked all banks not to lend money to organisations and traders that do not use jute bags and sacks to pack paddy, rice, pulses, wheat, fertiliser and sugar as per the Mandatory Jute Packaging Act 2010.

The law makes it mandatory for manufacturers to use packaging materials made of at least 75 percent of jute fibre.

First-time rule violators face a Tk 50,000 fine or a year in prison. Second-time offenders would be subjected to both the penalties.

Bangladesh Bank's instruction came after State Minister for Textiles and Jute Mirza Azam said the government would soon take crash programmes to promote the use of jute-based packaging and stop plastic packaging in a month or two.

Speaking to The Daily Star last month, Azam blamed plastic bag traders for the current situation.

The proliferation of plastic packaging has forced some jute mills to close and discouraged many others from expanding business.

Public and private millers have been suffering losses as demand for jute-based products is not increasing.

If the local market with 160 million consumers begins using jute bags, many millers will not need to export jute and jute goods, according to Najmul Huq, managing director of Janata Jute Mills.

This will encourage new investments and farmers will get due prices of their produce riding on the domestic demand alone, he said earlier.

Khondaker Golam Moazzem, additional research director of Centre for Policy Dialogue, said the full enforcement of the packaging law will create demand for 84 crore jute bags a year for selected agricultural and non-agricultural products.

By one estimate, about 70 percent of local raw jute will be used up in the production of those bags, he said.