BB proposes review of lending rates
Thursday, 14 April 2011
Nazmul Ahsan
Bangladesh Bank (BB) has proposed to increase either the existing lending rate or subsidy by two per cent on low interest-bearing farm loans for cultivation of maize and non-cereal produces, official sources said. The proposal, if implemented, would boost the loan amount, now being disbursed by government-owned banks, and increase the production of the agriculture produces in the country, argues BB in a letter to Ministry of Finance (MoF). Besides, the private commercial banks (PCBs) will be encouraged to disburse loans in the sub-sector of agriculture products, if one of the proposed measures is approved by the ministry, said the letter of BB. The letter said the proposed new criteria of enhanced lending rate or higher subsidy may be introduced from the next fiscal 2011-2012. Currently, six state-owned banks disburse loans on cultivation of onion, pulses, spices, and oil seedsrapes at lending rate of two per cent. The BB provides subsidy to the banks concerned at the rate of six per cent on their disbursed low interest-bearing agriculture loans. The provision of low interest-bearing bank loan has been in effect since 2006. The banks are: Sonali, Janata, Agrani, Rupali, Rajshahi Krishi Unnayan Bank and Bangladesh Krishi Bank. The letter said banks are often found reluctant to disburse the low interest-bearing credit as they incur loss despite getting subsidy at the rate of six per cent. "The disbursement of bank loan and production of different categories of spices, pulses and seeds will see a phenomenal growth if one of two alternative proposals given by BB is approved by the MoF," a top BB official told the FE. "The PCBs will also be encouraged to disburse loan in the sector if our proposal is accepted," the official added. He said the central bank is now planning to bring the PCBs under the mandatory low interest-bearing agriculture loan to make the country self reliant in spices and pulses. According to BB statistics, six banks altogether disbursed only Tk 200 million in such firm loans in fiscal 2009-2010. The amount of disbursed loan in the sub-sector by the banks concerned during July-February period of the current 2010-2011 fiscal year stood at Tk 408 million. A top official in the MoF said they are convinced with the BB proposal, saying the proposal will be endorsed soon considering the needs and realities of the country. He, however, could not specify which option of BB will be approved.
Bangladesh Bank (BB) has proposed to increase either the existing lending rate or subsidy by two per cent on low interest-bearing farm loans for cultivation of maize and non-cereal produces, official sources said. The proposal, if implemented, would boost the loan amount, now being disbursed by government-owned banks, and increase the production of the agriculture produces in the country, argues BB in a letter to Ministry of Finance (MoF). Besides, the private commercial banks (PCBs) will be encouraged to disburse loans in the sub-sector of agriculture products, if one of the proposed measures is approved by the ministry, said the letter of BB. The letter said the proposed new criteria of enhanced lending rate or higher subsidy may be introduced from the next fiscal 2011-2012. Currently, six state-owned banks disburse loans on cultivation of onion, pulses, spices, and oil seedsrapes at lending rate of two per cent. The BB provides subsidy to the banks concerned at the rate of six per cent on their disbursed low interest-bearing agriculture loans. The provision of low interest-bearing bank loan has been in effect since 2006. The banks are: Sonali, Janata, Agrani, Rupali, Rajshahi Krishi Unnayan Bank and Bangladesh Krishi Bank. The letter said banks are often found reluctant to disburse the low interest-bearing credit as they incur loss despite getting subsidy at the rate of six per cent. "The disbursement of bank loan and production of different categories of spices, pulses and seeds will see a phenomenal growth if one of two alternative proposals given by BB is approved by the MoF," a top BB official told the FE. "The PCBs will also be encouraged to disburse loan in the sector if our proposal is accepted," the official added. He said the central bank is now planning to bring the PCBs under the mandatory low interest-bearing agriculture loan to make the country self reliant in spices and pulses. According to BB statistics, six banks altogether disbursed only Tk 200 million in such firm loans in fiscal 2009-2010. The amount of disbursed loan in the sub-sector by the banks concerned during July-February period of the current 2010-2011 fiscal year stood at Tk 408 million. A top official in the MoF said they are convinced with the BB proposal, saying the proposal will be endorsed soon considering the needs and realities of the country. He, however, could not specify which option of BB will be approved.