Private banks to disburse Tk 31b agricultural credit

FE Team | Published: July 04, 2007 00:00:00 | Updated: February 01, 2018 00:00:00

Siddique Islam
For the first time, 39 foreign and local private commercial banks are going to sanction agriculture credit along with the eight state-owned banks and financial institutions to provide loans to farmers across the country.
The banks have already sent their initial target to disburse Tk 31.00 billion for fiscal 2007-08 to the Bangladesh Bank (BB) in line with a decision taken at the bankers' meeting, official sources said.
On June 12, the BB Governor Salehuddin Ahmed asked the private banks to move ahead with disbursement of agriculture credit, mainly seasonal crop loans, along with the state-owned banks and financial institutions to help the peasants.
"All scheduled banks will take part in disbursement of agro-credit in the current fiscal to facilitate the country's rural socio-economic activities," a BB senior official told the FE Tuesday.
He also said the agricultural credit may contribute to achieve the seven per cent growth of gross domestic product (GDP) in the current fiscal year.
Finance ministry forecasts a 7.0 per cent GDP growth for the fiscal 2007-08 in the budget.
"We are expecting the agro-credit also may help to increase the credit flow in the private sector," the BB official added.
Credit growth to the private sector declined by 1.55 percentage points in the July-March period of fiscal 2006-07 because of political uncertainty and cautious monetary policy pursued by the central bank, sources in the banking sector said.
The private sector credit growth rate fell to 11.02 per cent in the July-March period of the fiscal 2006-07 from 12.57 per cent in the same period of the previous fiscal, the central bank data showed.
The bankers said the agro-credit may help boost the overall economic activities across the country and reduce migration from rural to urban areas by creating local job opportunities.
"The overall economy will experience a positive result if the agro-loan disbursement is properly monitored," Managing Director of the National Commerce and Credit (NCC) Bank Limited Nurual Amin told the FE.
One of the positive sides of the agro-loan is that it carries less default risk compared to other sectors, Amin, who is closely involved with agro-credit disbursement, observed.
Investment in the agriculture sector by both local and foreign private commercial banks is 'very poor' as statistics showed that agricultural sector receives only 2.90 per cent of their total credit outlay, sources in the BB said.
Meanwhile, the government has set a target to disburse Tk 63.51 billion as agriculture credit through eight state-owned banks and financial institutions for fiscal 2007-08.