Bangladesh, according to the World Bank, has graduated from LDC status (Least Developed Country) to a lower middle-income country making notable progress in prime development indices. Ready-made garment (RMG) sector is one of the leading performers that have contributed heavily to the national accounting portfolio with continuously rising export earnings. In the field of global market of RMG, Bangladesh has now a firm position and is one of the leading exporters of the present time. As experts have advocated, RMG industry is one of the areas where the government is to put more emphasis on and scale up investment opportunities so that it can excel to compete in the world market and energise the national economy with a more stable and growing export income. Keeping eye on this vision, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) has set a target to earn US$ 50 billion through export by 2021. As experts, market analysts and businessmen suggested in a three-day fair titled ‘Bangladesh Apparel& Safety Expo, Chittagong 2015’ recently that the task might be tough but not a Herculean one. ‘Bangladesh Apparel and Safety Expo, Chittagong 2015′ came up with a list of most needed initiatives. A specialised bank for RMG is one of the major priorities. The bank will solely deal with RMG affairs, concentrate on development and improvement of the industry with customised interest rates, special credit offers, occasional and/or seasonal financial scheme that will promote RMG growth. This bank can help cross traditional banking barriers of export and customise policies to make easy financing for RMG producers. Positive as well as friendly relationship with foreign banks, in this connection, will allow local companies to get a trustworthy deal in a more formal and institutional way. A specialised bank for RMG can be a key component that may reduce the lead-time in export and import and make the administrative processes of L/Cs dealing simpler and pro-RMG. The aim of a specialised bank is to concentrate on a specific field of investment such as RMG, tannery, jute, farm products or even social development. In many countries such as India, China, Malaysia and Indonesia, the specialised banks have overtaken the commercial banks’ activities to attract investment and focus on availability of financing for special promising sectors. The contribution of the specialised banks in an economy is very significant to enhance the financing in the sector-specific areas. A number of specialised banks such as the Bangladesh Development Bank (formerly known as Bangladesh Shilpa Bank and Bangladesh Shilpa Rin Sangstha), Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank are currently operating in Bangladesh. They pay specific attention to investments in specific sectors. Besides, Ansar-VDP Bank, Bangladesh Samabaya Bank Ltd. (BSBL), Grameen Bank and Karmasangsthan Bank are focusing at very niche level. The basic aim of a specialised bank is to extend financial assistance for industrialisation and to provide credit facilities and equity support to industrial enterprises. Furthermore, the specialised banks provide financial and technical assistance to broaden private as well as public sector industrial base of the country. It prioritises, especially, export-oriented/export linkage industrial units, efficient import substitution, joint ventures, commercialisation of local technology and promotion of agro-based industry. Specialised bank for RMG need of the hour Now, it is high time to concentrate on the prime export sector, RMG, which accounts for more than 80 per cent of export earnings of the country. Recently, officials have expressed the government’s intention to set up a specialised bank for RMG sector to meet the vision of US$ 50 billion export earnings by 2021. The export and import financing of RMG and textile industries is growing markedly since the inception of the RMG sector. The export financing in December 2009 was only Tk 82.36 billion which has doubled to Tk 160.61 billion in March 2015. On the other hand, the import financing has increased three-fold within this time. Both export and import financing indicate the possibility of huge investment in the RMG sector. A specialised RMG bank can: a) extend long- and medium-term loan facilities to garments exporters at low cost, b) provide working capital loans and equity support, c) help inland and outland L/C process of RMG exports, and d) issue guarantees for large loan. Further, the specialised bank’s financing can be in export credit (pre-shipment and post-shipment), bill purchase/discount. The funds of the bank can be arranged from different international sources such as the World Bank, the Asian Development Bank, IMF, Japan International Cooperation Agency (JICA), UNDP, the Bangladesh Bank, the Bangladesh government, or other international governmental agencies. This fund should be at low cost so that the specialised bank can provide loan facilities to the industries at low cost and with minimum interest rate. The bank can safeguard the exporters against the failure of overseas importers to make payment, encourage exporters to set up new garment factories and give exporters greater financial flexibility in case of any emergency. The bank can provide technical, administrative and managerial assistance for promotion, management and expansion of both forward and backward linkage of garment exporting companies. It can be a proper channel to bring the export earnings to Bangladesh. Additionally, the international buyers will feel comfortable to pay the dues through proper channel.
