The textile and jute ministry seeks to put the default loans of private sector jute mills owed to four state-run commercial banks in "block accounts" to stop interests from piling up in a bid to rescue the mill owners from a heavy financial burden to some extent.

Banking Division sources said the total of default loans of private jute mills have not been calculated yet, but it is roughly Tk 12 billion.

The ministry will send a letter to the Finance Division in this regard to arrange a meeting with the stakeholders to discuss the ways to ease the huge burden of loans of the private jute mills in state-owned Sonali Bank, Janata Bank, Agrani Bank and Rupali Bank.

The decision came at a meeting of the Consultative Committee on Jute at the jute ministry earlier this month.

Jute and Textile Minister Abdul Latif Siddique presided over the meeting where the managing directors of the four state-run banks were also present. The meeting also decided to declare jute goods as an agriculture product within this year.

During the meeting, the jute minister requested the managing directors of four state-owned commercial banks to give low-interest loans to the real jute farmers.

The meeting also co-opted Jahangirnagar University Professor Khurshid Begum in the consultative committee lead various researches on jute politics and to explore new markets at home and abroad.

Default loans of private jute mills in four state-run banks till June 30, 2009 will be ‘blocked’ for 30 months with previous five years’ interest. The amount will be repaid in installments with an interest rate of 8 percent for 10 years, the meeting decided.

According to the decision, the private jute mills would also be provided with 7 percent interest rate facility on working capital loan, which would be ensured by the Finance Division, the Finance Ministry Monitoring Cell and Bangladesh Bank (BB).

The local jute exporters purchase jute at Tk 2200-2400 per tonne, but have to export jute items at Tk 1200-1400 per tonne, meeting sources said.

Due to loan burden, the number of private jute mills is decreasing in the country despite a high demand of jute goods in the global market, Professor Khurshid Begum told daily sun on Monday.

A research on the country’s jute sector is examining the ways to revive the country’s one of the oldest export sectors as we have comparative advantage in this particular sector, she added.

The Daily Sun/Bangladesh/ 19th June 2012