Disbursement of agri credit mandatory for all banks

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FE Report
The central bank has made mandatory for all local and foreign commercial banks to disburse agriculture credit from this fiscal to ensure food security of the country.
The Bangladesh Bank (BB) has also introduced a 'Revolving crop credit limit system' for a three-year term to gear up disbursement of the farm loan.
Under the new system, the farmers will be relieved from applying afresh every time they need loans during the period.
The system will facilitate the loan account of a farmer automatically renewed and the farmers would be entitled to a fresh crop loan without submitting any new application, officials said.
The central bank issued two separate circulars Monday in this connection and asked the banks to follow the new instructions properly to facilitate farmers across the country.
The BB's announcement came when at least five commercial banks have not yet fixed their agro-credit disbursement targets for fiscal 2008-09, they added.
"We have asked the banks, which have not yet fixed their agro-credit target, to immediately fix the target and inform the central bank," a BB senior official told the FE.
He also said the central bank took the move to ensure contribution of all banks on the country's overall production.
Each bank will have to set aside a certain portion of their total loan portfolios for disbursement of agriculture loan at the beginning of every fiscal and will inform to the BB.
"The target will be rationalised and the banks will have to monitor regularly to achieve such target," the BB said in its circular.
The central bank can ask any bank to re-fix the agro-credit target if it finds unrealistic, the circular said.
The central bank earlier set an agriculture credit target of nearly Tk 94 billion for the current fiscal year, which is 13 per cent more than the last fiscal year, considering the need for increasing food production through increasing investment in the sector.
The central bank also asked the banks to follow 'area approach' aiming to increase the flow of agro-credit based on the production of crops.
The banks, having not enough branches in the rural areas, will be allowed using non-governmental organisations (NGOs) linkage for disbursement of the farm credit.
"But the banks must ensure whether or not the disbursed loans are being used in the agriculture sector," the circular added.
Eight state-owned banks and financial institutions along with other local and foreign commercial banks disbursed Tk 9.72 billion during July-August period of the FY09, registering a 53.61 per cent growth over the corresponding period of the previous fiscal.
Agro-credit recovery, however, reached Tk 9.68 billion, marking a 105.92 per cent growth during the period over the same period of the previous fiscal. A total of Tk 4.70 billion was recovered in the last fiscal.
Eight state-owned 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 loans have been given to agro-based eight sub-sectors for funding cultivation, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation.