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Bankers have identified late shipment and delays in presentation of documents as major impediments to financing the country's readymade garment (RMG) sector.
They have also identified default and non-repatriation of export proceeds as another critical challenge in this regard.
The findings of an opinion survey on banks were disclosed at a workshop on 'trade facilitations in RMG by banks: risks and mitigation techniques' organised by Bangladesh Institute of Bank Management (BIBM) held at its auditorium in the city on Sunday.
About 66 per cent of the surveyed bankers considered late shipment as the critical challenge associated with RMG trade services, according to the research finding.
Some 53 per cent of the respondents have identified late presentation of documents while 42 per cent see non-repatriation of fund against contract as challenges to financing in the largest foreign currency earning sector.
Lower usage of packing credit, inefficiency in assessing working capital, absence of tolerance in credit limit, absence of customised collateral system, inconsistency in different trade charges among banks were seen as operational obstacles in proper trade facilitation by the exporters, it said.
BIBM director general Toufic Ahmad Choudhury presided over the workshop.
Former professor of Dhaka University Barkat-e-Khuda, BIBM supernumerary professors Helal Ahmed Chowdhury and Md Yasin Ali, Association of Bankers, Bangladesh chairman and managing director and chief executive officer of Dhaka Bank Syed Mahbubur Rahman, managing director and chief executive officer of NRB Bank Mehmood Husain, vice president of Bangladesh Knitwear Manufacturers and Exporters Association Fazlee Shamim Ehsan among others, were present.
"Late shipment and failure to export or late presentation are identified as the most critical challenge of the RMG sector of the country," BIBM professor and director (training) Shah Md Ahsan Habib said while presenting his research paper.
The research identified the need for addressing capacity development of the bankers and awareness development of the traders for ensuring safe and efficient RMG trade.
It suggested developing skilled manpower in handing RMG sector, educating customer on trade regulations and enhancing due diligence for transferable letter of credits (L/Cs).
The other recommendations for traders included creating awareness, developing negotiation skills in handling disputes, greater coordination among regional trade bodies and taking initiative in identifying foreign buyers.
Mr Barkat-e-Khuda stressed for specific area-based training for bankers to mitigate export related fraudulence activities saying BIBM also can take initiative in this regard.
Though cost would go up if regulations are followed, it helps mitigating risks in the long run, he said recommending for full automation in the banks.
Terming subcontracting as the riskiest for RMG sector, Mr Helal said bankers should be cautious about subcontracting.
"The government should provide policy support in reducing foreign trade risks," he opined.
Yasin Ali termed that capital flight in the name of foreign financing is a 'crime'.
He alleged that a quarter of bankers are involved in the trade related money laundering scams.
Regarding to stock lot, he suggested for monitoring exporting companies whether they have repeated incidents of stock lot.
"If stock lot becomes repeated incident, bankers have to be aware that there might be something to smell a rat or there might be possibility of money laundering," he opined.
Syed Mahbubur Rahman suggested that banks should monitor all the export and import procedures from beginning to end to avoid any untoward inconsistency.
The managing director of NRB Bank Mehmood Husain stressed the need for arranging national and international training to make the foreign trade risk-free.
Majority of the shipments could not be made on time for various reasons, the BKMEA leader said.
He blamed shortage of skilled workers for the failure of timely shipment.
He, however, suggested for consulting stakeholders before signing any international convention for better understanding about the merits and demerits.
Deputy managing director of Eastern Bank Ahmed Shaheen said the RMG trade largely depends on mutual trust as it is not always possible to comply with all the regulations.