BB to allow NGOs to disburse PCBs' loans in Sidr-hit areas

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Siddique Islam
The Bangladesh Bank (BB) will allow commercial banks, particularly private commercial banks (PCBs), to disburse fresh credit through non-governmental organisations (NGOs) in the areas affected by the cyclone Sidr.
An announcement in this connection will be made from a special meeting with the chief executive officers and managing directors of the PCBs scheduled to be held at the central bank on December 18 with BB Governor Salehuddin Ahmed in the chair.
After the announcement, the commercial banks, particularly the PCBs, not having enough branches in the rural areas, will use such NGO links to intensify disbursement of their agricultural loans and SME (small and medium enterprise) financing in the cyclone-hit areas.
Earlier, the BB sent a list of 62 NGOs to the commercial banks in this connection.
"We will allow the PCBs to disburse credit using the NGOs' network aiming to facilitate the overall financing activities in the Sidr-affected areas," a BB senior official told the FE Thursday.
He also said some PCBs have already contacted the NGOs, which are working in the areas, to offer loans to the people of the cyclone-hit areas.
The country's NGOs see the central bank move as a positive step that will also help leave a positive impact on financing in the Sidr-affected districts.
"We have already requested the BB governor to look into the possibility of arranging more funds for the NGOs to facilitate their activities, particularly in the cyclone-hit areas," M Tajul Islam, Director of the Federation of NGOs in Bangladesh (FNB), told the FE Thursday.
Meanwhile, the NGOs have agreed to suspend their loan recovery drive for three to six months in the cyclone-hit coastal districts to help their borrowers there to overcome their financial difficulties.
The consensus was reached at a meeting of the representatives of the lending NGOs, held in the conference hall at the central bank Tuesday last.
"We are now working to devise an appropriate mechanism for providing loans to the cyclone-hit people," another BB official said.
The BB has already directed the banks to take initiatives to achieve a minimum of 70 per cent to 80 per cent of their farm credit disbursement target by January next in the cyclone-hit areas.
The central bank has set the credit target at Tk 17.0 billion for the government-owned banks and financial institutions for disbursement among the cyclone-hit people.
The BB has set the overall credit target at Tk 81.92 billion, which includes Tk 13.47 billion from PCBs and the rest from government-owned banks and financial institutions for disbursement among farmers across the country.
The BB earlier asked eight government-owned banks and financial institutions to intensify disbursement of fresh farm loans, along with rural credits, to all sections of the cyclone-affected people on easy terms and conditions.
Under the new move, the cyclone-hit farmers will be eligible for fresh credits after rescheduling of their previous classified loans. The banks, if necessary, may relax the provision on down payment in case of loan rescheduling.