Central bank asks NCBs to disburse fresh credit to flood-hit farmers

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Siddique Islam
The Bangladesh Bank (BB) has asked the state-owned banks to disburse fresh agricultural credit to the flood-affected farmers on relaxed rules and regulations.
Under the move, the flood-hit farmers will be eligible for fresh credit after rescheduling their previous classified loans. The banks, if necessary, may relax the provision on down-payment for rescheduling the loan.
The central bank issued a circular Thursday in this connection and directed the managing directors (MDs) of six state-owned banks to follow the instructions on disbursement of agro-credit for post-flood rehabilitation.
The Ministry of Finance has also asked the eight nationalised commercial banks and financial institutions for taking necessary preparations to disburse agro-credit as soon as the floodwater recedes.
The instruction came at the meeting with the MDs of the eight banks and financial institutions Thursday with acting finance secretary Mohammad Tareque in the chair.
The meeting also asked the bankers to form special cells at regional level as well as the headquarters to monitor and supervise the overall agro-credit disbursement.
"The ministry has directed us to ease conditions for disbursing agro-credit on a priority basis as the peasants are severely affected by the floods. Farmers need financial support to recoup their losses," a MD of a state-owned bank told the FE.
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 agro-based eight sub-sectors like crops, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation.
"Measures have also been taken to ensure that the farmers receive fresh credit from banks within shortest possible time without any harassment under the fresh credit facilities," the central bank said in its circular.
The BB also asked the banks to set up credit monitoring and complaint cells at different levels to ensure monitoring of the overall agro-credit disbursement.
"We have asked the banks to disburse the credit to the flood-hit farmers through relaxing the provision on loan rescheduling for rehabilitation of agriculture sector in the aftermath of flood," a BB senior official told the FE Thursday while explaining main objective of the circular.
Meanwhile, the central bank has set a target of Tk 76.98 billion, which includes an amount of Tk 10.78 billion for private commercial banks -- both local and foreign - for disbursement among flood-affected farmers across the country.
The state-owned commercial banks have already issued internal circulars asking all their branches to take necessary measures to disburse the credit to the flood-hit farmers.
"We have issued an internal circular asking all branches to take measures so that they can achieve target for the current fiscal. We will monitor their performance every month," Managing Director and Chief Executive Officer of the Agrani Bank Syed Abu Naser Bukhtear Ahmed told the FE.
For the first time, 39 private commercial banks, both foreign and local, have already allocated funds for the agricultural credit.
Most of the private commercial banks have already taken steps to disburse the agro-credit to farmers in line with the central bank's instructions, sources in the banking sector said.
According to the BB's statistics, the state-owned eight banks and financial institutions disbursed agricultural credit worth Tk 52.93 billion in fiscal 2006-07, which is over 83 per cent of the target worth Tk 63.51 billion.
In 2005-06, the banks and financial institutions disbursed agricultural credit worth Tk 54.96 billion and in 2004-05, the amount was Tk 49.57 billion.