Food security takes top priority in Bangladesh, amid global alert to crisis-time famines, as the government asks banks to take funds to farmers' doors to reduce costly NGO lending.
Officials say aiming to ensure easy access of farmers to bank loans the government has issued a number of directives with one asking for lowering NGOs' participation in loan distribution.
According to them, the Prime Minister's Office (PMO) in a recent meeting issued the orders which the ministry of agriculture has communicated to the banks to go by.
According to officials concerned, most private banks do not disburse loans on their own rather engage non-governmental organisations (NGOs) for distribution.
The cost of loan handed out by the NGOs runs up to 24 per cent while bank rate is 8.0 per cent.
Officials further said the private banks distribute 70 per cent of their farm loans through NGOs which the PMO meeting asked for lowering down to 30 per cent at the earliest.
"Because, whenever the loans are distributed by the NGOs, the rate of interest goes up," Rabindra Sri Barua, additional secretary at the ministry of agriculture told the FE.
According to him, the meeting also asked the Bangladesh Bank to take measure to lower the interest rate charged by the NGOs.
"All the banks have been asked to set up a farm-loan booth in every branch so that farmers can understand where to go to make loan application," he says.
The meeting noted that farmers remain busy in fields and have little time to go to banks. As such, the meeting asked the banks to organise agriculture-loan fairs in district and upazila levels, which bankers and farmers will attend.
At such fund fairs the banks will distribute application forms and receive on the spot from the farmers and approve loans.
Also, agriculture, fisheries, and livestock departments have been directed to prepare a list of farmers in every upazila who need loan. The list will be given to the banks through upazila farm-loan committee. Thereafter, bank officials will go door to door to deliver the loans.
The department of agriculture has been asked to invite bankers to training programmes it arranges for the farmers, where the bankers can distribute form for loan application and start loan-approval process.
"These are very system-changing decisions for agriculture-loan distribution," says Mr Barua.
According to sources, the private bank officials at the meeting said they do not have reach in the rural areas and they hardly have infrastructure up to district levels and commercially important upazila levels.
They said distributing loans on their own arrangements at the rural level would be a tough task. However, they will lower NGOs' participation in farm-loan distribution in phases.
Contacted, Abul Kalam Azad, director, Agriculture Credit Department of Bangladesh Bank, told the FE that the central bank holds meetings with state-owned banks every month and with private banks in two months regularly to get updates on their loan targets, how much they distributed, and the recovery position.
"We put them under constant monitoring," he says.
Regarding the lowering of the NGOs dependence in farm-loan disbursement he says as the private banks have no branches in union level or rural areas, they have no option but to depend on NGOs.
Mr Azad points out the fact that farmers have worries in dealing with banks and so they do not want to go there. On the other hand, he says, NGOs door to door to find out farmers to provide loan, which is easier for the borrowers.
According to present policy banks mandatorily have to distribute 2.10 per cent of their total loans to agriculture sector. Of the credits, 60 per cent will go for cropping, 10 per cent for fisheries, 10 per cent for livestock, and 20 per cent for other agriculture sub-sectors.
In the current fiscal year, the government has set a target to distribute Tk 309.11 billion as farm loan. In the last fiscal year, the target was Tk 283.91 billion while disbursement stood at Tk 288.34 billion.
Meanwhile, apart from focus on augmenting domestic harvests of food, the government has eased import with cut-down duty to enhance stock of grains under a contingency plan, as food prices alongside that of other consumer goods stay high. .
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