BB asks banks to stop lending to tobacco farms
Monday, 19 April 2010
FE Report
The central bank has asked the commercial banks to stop financing the tobacco farms to discourage cultivation of the 'harmful' crop across the country.
"We've taken the measure to ensure food security as well as protect environment through discouraging the cultivation of the crop," a senior official of the Bangladesh Bank (BB) told the FE Sunday.
He also said the banks have been instructed to prohibit financing in tobacco cultivation including direct financing to the farmers and under contract farming system.
The central bank issued a circular in this connection Sunday and asked the chief executives and managing directors of all 47 scheduled banks to maintain the instructions properly.
Besides, the BB asked the banks to recover the tobacco cultivation loans, disbursed earlier, and not to renew such loans, according to the circular.
The banks have been asked to take necessary steps to provide loans to the farmers, who used to cultivate tobacco earlier, to produce alternative cash crops in their lands.
Bangladesh Anti-Tobacco Alliance (BATA) welcomed the BB's latest move, saying that the measure would help discourage the production of tobacco in the country.
"We've urged the central bank for taking measures to provide fresh loans to the farmers, who cultivated tobacco earlier, so that they can cultivate alternative cash crops in line with the existing tobacco control law," Member Secretary of the BATA Syed Mahbubul Alam told the FE.
"To discourage tobacco farmers from producing tobacco products and to encourage them to produce alternative cash crops the government shall provide loans on simple terms and the facility shall continue for the next five years from the coming into force of this act," the law said.
The central bank has asked the commercial banks to stop financing the tobacco farms to discourage cultivation of the 'harmful' crop across the country.
"We've taken the measure to ensure food security as well as protect environment through discouraging the cultivation of the crop," a senior official of the Bangladesh Bank (BB) told the FE Sunday.
He also said the banks have been instructed to prohibit financing in tobacco cultivation including direct financing to the farmers and under contract farming system.
The central bank issued a circular in this connection Sunday and asked the chief executives and managing directors of all 47 scheduled banks to maintain the instructions properly.
Besides, the BB asked the banks to recover the tobacco cultivation loans, disbursed earlier, and not to renew such loans, according to the circular.
The banks have been asked to take necessary steps to provide loans to the farmers, who used to cultivate tobacco earlier, to produce alternative cash crops in their lands.
Bangladesh Anti-Tobacco Alliance (BATA) welcomed the BB's latest move, saying that the measure would help discourage the production of tobacco in the country.
"We've urged the central bank for taking measures to provide fresh loans to the farmers, who cultivated tobacco earlier, so that they can cultivate alternative cash crops in line with the existing tobacco control law," Member Secretary of the BATA Syed Mahbubul Alam told the FE.
"To discourage tobacco farmers from producing tobacco products and to encourage them to produce alternative cash crops the government shall provide loans on simple terms and the facility shall continue for the next five years from the coming into force of this act," the law said.