Banks asked to follow relaxed rules for speeding up agri credit disbursement

FE Team | Published: October 29, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

FE Report
The Bangladesh Bank (BB) has asked eight state-owned banks and financial institutions to follow the recently relaxed rules and regulations for intensifying disbursement of fresh agriculture credit to the flood-affected farmers.
The central bank has relaxed the existing rules and regulations to allow the flood-affected farmers for taking fresh credit through rescheduling of their previous classified loans.
Under the measure, the banks are allowed to reschedule the agro-credit for one year by relaxing the existing down-payment conditionality.
The chief adviser of the caretaker government has already advised the central bank to speed up disbursement of farm credit.
The instructions came at a review meeting of a high-level committee, held at the central bank Sunday with Deputy Governor of the BB and convener of the committee Nazrul Huda in the chair.
The government earlier formed an 11-member committee to supervise and monitor disbursement of the post-flood agro-credit of the state-owned banks and financial institutions.
The meeting reviewed the overall agro-credit disbursement position and asked the banks and financial institutions to provide credit support to the flood-hit farmers for ensuring smooth supply of agricultural inputs, including fertilisers.
The meeting asked the banks and financial institutions to continue their drives to increase disbursement of farm credit to help stabilise overall agricultural production.
"The overall economic performance, including the growth of the gross domestic product (GDP), will suffer a setback if the agricultural production is hampered," a senior official, who attended the meeting, told the FE.
He also said the Ministry of Finance has agreed to issue guarantees in favour of the Bangladesh Krishi Bank (BKB) and the Rajshahi Krishi Unnayan Bank (RAKUB) for receiving re-financing facilities worth Tk 7.0 billion from the central bank.
The central bank has already recommended sanctioning of Tk 7.0 billion to the BKB and the RAKUB under a special re-financing scheme to avoid any liquidity problem of those banks relating to disbursement of the agro-credit.
The representative of agriculture ministry informed the meeting that there was no shortage of seeds and that the ministry had already started distribution of the seeds to the flood-affected cultivators free of cost.
The bankers said the disbursement of agricultural credit maintained a slow pace during the first quarter of the current fiscal due mainly to prolonged floods.
However, the bankers are hopeful about the increase in the disbursement of the agro-credit during the October-March period of fiscal 2007-08 to meet the growing demand of the farmers.
"We will take actions against the banks that will show reluctance to disburse credits to agriculture and small and medium enterprises," BB Deputy Governor Nazrul Huda told reporters after the meeting.
He also said the central bank has already advised the government not to increase the prices of fuel oils to check inflationary pressures on the economy.
"A co-orientated effort is a must for increasing agricultural production as it is not a task of any single agency," Huda observed.
The eight banks and financial institutions have disbursed Tk 8.85 billion during the July-September period of the fiscal.
A total amount of Tk 68.44 billion was earmarked for disbursement as agri-credits among the flood-affected farmers through eight state-owned banks and financial institutions for fiscal 2007-08.
The eight state-owned banks and financial institutions are: Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, BKB, RAKUB, Bangladesh Rural Development Board (BRDB) and Bangladesh Samobaya Bank Limited (BSBL).
The loans are to be sanctioned for eight agro-based sub-sectors like crops, irrigation equipment, livestock, agricultural product marketing, fisheries and poverty alleviation.