Agro-credit disbursement to fall short of target

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FE Report
The disbursement of agro-credit is unlikely to achieve its target in the outgoing fiscal due to poor demand for such credit from farmers in the rural areas across the country.
"We are expecting to achieve nearly 90 per cent of the agro-credit target amounting to Tk 63.51 billion (6,351 crore) for the fiscal 2006-07," a senior official of the Bangladesh Bank (BB) told the FE.
He said the poor demand is leading to lower disbursement of the farm credit, which is mainly linked to weather conditions and natural calamity.
The official, however, said the central bank is continuously persuading the state-owned banks and financial institutions concerned to increase the disbursement of agro-credit to attain the target.
Eight nationalised commercial and specialised banks disbursed Tk 42.94 billion during the July-April period of the fiscal 2006-07, which is 67.62 per cent of the total target.
During the period, the agro-credit disbursement dropped by 7.84 per cent compared to the corresponding period of the previous fiscal. In the first 10 months of the fiscal 2005-06, farm credit worth Tk 46.60 billion was disbursed.
A total disbursement target of Tk 63.16 billion was fixed for the eight banks and financial institutions for the fiscal 2006-07. The amount is around 13.95 per cent higher than last fiscal's target of Tk 55.42 billion.
The banks and financial institutions are Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, 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 eight agro-based sub-sectors like crops, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation.
Sources, however, said the BB is now monitoring sector-wise disbursement of agro-credit to ensure smooth operation of the loan programme across the country.
"We have decided to give some incentives to encourage the private commercial banks (PCBs) along with the state-owned banks to lend in the agricultural sector," another senior official of the central bank said.
Currently, at least four PCBs -National Bank Limited, National Commerce and Credit (NCC) Bank Limited, Islami Bank Bangladesh Limited, and IFIC Bank Limited - are also disbursing farm credit.
Agro-credit recovery, however, reached Tk 37.87 billion, registering a 14.70 per cent growth during the first 10 months of this fiscal compared to the corresponding period of the previous fiscal. A total of Tk 33.01 billion was recovered in the last fiscal.
Currently, an 11-member high-powered committee on agro-credit supervising and monitoring, headed by BB Deputy Governor Nazrul Huda, is working to supervise and monitor disbursement of the agro-credit by the state-owned banks and financial institutions.