The 2015-16 agricultural and rural credit policy announced by the Bangladesh Bank (BB), providing for Tk 164 billion, has given a shot in the arm of agricultural development in the country. The growth in credit disbursement has been projected to be 5.5 per cent in the ongoing fiscal year over that of the last fiscal.
BB governor Dr Atiur Rahman deserves thanks for being aware of credit crunch in rural areas when he directed the banks to take necessary initiatives for achieving agricultural loan-disbursement target by ensuring proper use of such loan through strengthening of monitoring across the country.
Apparently, he was also aware of the fact that huge amounts of farm loans disbursed by different banks are yet to be recovered while many recipients were found missing even without having their addresses. That was why he emphasised on strict monitoring.
The BB governor also asked the banks to bring qualitative and quantitative changes in agricultural credit through establishing a sustainable agricultural credit system for ensuring hassle-free credit to farmers. "We've to increase farm and rural credit and bring farmers into the banking system," he told chief executive officers (CEOs) and managing directors (MDs) of the commercial banks while releasing the 2015-16 farm credit policy.
The BB governor also gave guidelines on sectors to be given farm credit so that the country does not have to drain out foreign currencies in importing agricultural products. He asked the bankers to encourage cultivation of import-substitute crops. Conscious of failure of many banks in disbursement of farm credit, he warned that if any bank fails to achieve the target, it will have to deposit the funds with the central bank to the unachievable part of the target. The BB will not provide any interest for the deposit.
The 2015-16 agricultural and rural credit policy has set targets of credit disbursement for different banks. Six state-owned commercial banks have been tasked with disbursement of Tk 28.90 billion during FY 2015-16 while two specialised development banks will lend Tk 64 billion to the interested farmers. Besides, 38 private commercial banks will lend Tk 67.17 billion while nine foreign commercial banks disburse Tk 3.93 billion, according to the new farm-credit policy.
The BB earlier issued a directive not to file certificate cases against defaulting farmers who took loans but could not repay due to genuine reasons. The finance ministry had earlier issued a letter to the central bank, asking it to take initiatives to release the farmers from certificate cases. Six state banks -- Sonali, Janata, Agrani, Rupali, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank -- filed certificate cases against more than 2,00,000 farmers, according to BB data. Of them, arrest warrants were issued against 10,000. Default loans involving the certificate cases stood at Tk 5.70 billion as of November 30, 2014, up by Tk 180 million from January the same year.
Undoubtedly, farm loans have contributed significantly to sharp rise in food production and given fillip to non-food cultivation. But then the BB, in close consultations with different public and private sector banks, should take into reckoning as to how fake and fraudulent persons could get farm loans from the banks even concealing their identities and addresses. Certainly, some dishonest bank officials and employees along with rural touts are involved in swindling of people's money in the name of credit disbursement. Stringent and deterrent punishment needs to be given to the guilty persons who took advantage of liberal farm credit disbursement policy of the present government.
It is indeed a wonder that while recovery rate of loans given by non-government organisations (NGOs) at exorbitant interest rates is above 95 per cent, the banks providing low interest rates cannot even trace the loan-takers in many cases. This has to be investigated into and corrective actions are to be taken for the sake of genuine borrowers who toil day and night to feed the nation.
Field experiences in disbursing agricultural loans are bitter. The following issues have to be tackled:
n Difficulty in assessing farmers' eligibility for receiving loan,
n High cost of reaching individual farmers for small loans,
n Securing a guarantee for the loan,
n Receiving proper collateral papers for loans,
n Assessing the risk of a project,
*Reducing the cost of realisation and management to the minimum,
* Small or marginal farmers usually do not have any collateral papers like land deeds. Even if they have documents, most of them are not updated and
* The bankers do not give loans because of their unwillingness to take the risks without collateral.
It is because of the above problems that most of the bankers give loans to landed farmers or to the agro- traders, who have enough transaction with the bank branches and also have assets to use as collateral. In this way, the objective of the government to reach finance to the poorest farmers is not being attained.
Moreover, finding the right farmers and assessing them are beyond the scope of the banks' regular work, and is also very time-consuming. The operating cost of the banks will also increase if loans have to be realised by going to each individual farmer.
The Bangladesh Bank needs to interact with senior bankers, economists and other stakeholders in devising ways and means to reaching agricultural loans where these are needed badly in the country's greater interests. Farm loans are in fact tax-payers' money which must not go down the drain and must serve the cause of agricultural development in the country.
arjayster@gmail.com
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