Central bank warns PCBs for poor farm credit disbursements

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Siddique Islam
The central bank has reprimanded 10 commercial banks following their poor disbursements of farm credit despite continuous persuasion to increase such loans to help ensure food security of Bangladesh.
Disbursement of agriculture credit by the private commercial banks (PCBs) dropped by 27.36 per cent to Tk 14.03 billion during July-February period of this fiscal from Tk 19.32 billion of the corresponding period of the previous fiscal, according to the central bank statistics.
"We'll take actions against the commercial banks, if they fail to achieve their farm credit target by the end of this fiscal," a senior official of the Bangladesh Bank (BB) told the FE.
He also said the central bank has already sent letters to the commercial banks that included one state-own commercial bank (SCB) and foreign and local private commercial banks asking them for taking necessary measures in this connection.
The central bank took the latest move against the backdrop of falling trend in disbursement of agriculture loan by the PCBs along with the foreign commercial banks, officials said.
On January 22 last, the BB wrote to at least 40 commercial banks out of 48 to ensure adequate financial support to farmers ahead of Boro season.
During the period, the overall farm credit disbursements, however, recorded a growth of 7.22 per cent following some measures including relaxation of its rules and regulations by the central bank.
Eight state-owned banks and financial institutions along with the PCBs disbursed Tk 59.44 billion as farm credit during the period against Tk 55.44 billion of the corresponding period of the previous fiscal, the BB data showed.
The loans have been given to agro-based eight sub-sectors like crops, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation.
The banks and financial institutions have achieved 63.38 per cent of their annual target, which has been fixed at nearly Tk 94 billion for fiscal 2008-09. The amount is 13 per cent higher than the last fiscal.
The central bank will sit with the representatives of eight state-owned banks and financial institutions tomorrow (Monday) to review their overall agriculture credit performances.
"We'll ask the banks and financial institutions for tanking effective measure to achieve their farm credit target by all means," another BB official told the FE.
He also said the banks and financial institutions will be asked to increase recovery of the farm loans.
The recovery of farm loans, however, rose to Tk 53.20 billion during the period under review from Tk 40.86 billion of the same period of the previous fiscal.
The state-run banks and financial institutions are: Sonali Bank Limited, Janata Bank Limited, Agrani Bank Limited, Rupali Bank Limited, Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB), Bangladesh Rural Development Board (BRDB) and Bangladesh Samobaya Bank Limited (BSBL).
The central bank has already made it mandatory for all local and foreign commercial banks to disburse agriculture credit from this fiscal to help ensure food security of Bangladesh, the BB officials added.
On October 21 last, the central bank of Bangladesh relaxed its credit policy with a view to facilitating the disbursement of agricultural loans to sharecroppers and landless farmers across the country.