BB to consider waiving interest on loans to help Sidr survivors
Thursday, 6 December 2007
FE Report
The Bangladesh Bank (BB) will consider waiving or suspending interest charged on loans to help the people of the cyclone-affected areas resume their economic activities.
"We will consider the matter. But the central bank will not take any measure that will disturb the discipline in the overall banking sector," the BB Governor Salehuddin Ahmed told reporters at a briefing at the central bank Wednesday.
The central bank is also estimating the effects of cyclone Sidr on the country's overall balance of payments (BoP). The cyclone will lead to imports of a large quantity of food grains, construction materials and capital machinery, said the BB governor on arrival in the capital after a visit to the country's southern and southwestern cyclone-hit areas.
He said the central bank will also take into account the losses that the banks might show in their financial statements for disbursing credit at low rates of interest in the cyclone-hit areas.
"...Any previous error that shows up in their balance sheets will not be allowed," the central bank chief said, adding that the banks must play a pro-active role in disbursement of credit in the cyclone-hit areas.
The BB governor also instructed the banks to give special focus on the small and medium entrepreneurs (SME) including fisheries, salt industries and poultry farms while they disburse agro-credit in the Sidr-hit areas.
"We have asked the banks for taking necessary measures to rehabilitate the businessmen, who have lost their establishments during the cyclone, through disbursing fresh credit to them," the central bank chief added.
He also laid emphasis on proper distribution of agriculture inputs, including fertiliser, across the country.
The state-run Palli Karma Sahayak Foundation (PKSF) will provide a fund to its member non-government organisations (NGOs) to disburse interest-free credit.
The Micro-Credit Regulatory Authority (MRA) will sit with the leading NGOs to disburse their fund in the Sidr-affected districts at low rates of interest.
"We will hold meetings with the country's leading NGOs shortly to discuss ways to boost their financing activities in the cyclone-hit areas," the BB governor, who is also chairman of the MRA, said.
Some NGOs have already taken measures to stop their recovery drives in the cyclone-affected districts, he added.
The central bank has directed the banks for taking initiatives to achieve a minimum of 70 per cent to 80 per cent target of their farm credit disbursement by January next in the cyclone-hit areas.
"We have asked the banks, which are operating their business in the areas, to achieve the target for agriculture loan disbursements," Salehuddin noted.
He also said the central bank has also asked the banks to finance the fishermen forming a group after receiving guarantee from businessmen concerned.
The central bank has set the credit disbursement target at Tk 17.00 billion for government-owned banks and financial institutions for disbursement among cyclone-hit people.
The BB has set the overall credit target at Tk 81.92 billion, which includes Tk 13.47 billion from private commercial banks and the rest from government-owned banks and financial institutions for disbursement among farmers across the country.
The Bangladesh Bank (BB) will consider waiving or suspending interest charged on loans to help the people of the cyclone-affected areas resume their economic activities.
"We will consider the matter. But the central bank will not take any measure that will disturb the discipline in the overall banking sector," the BB Governor Salehuddin Ahmed told reporters at a briefing at the central bank Wednesday.
The central bank is also estimating the effects of cyclone Sidr on the country's overall balance of payments (BoP). The cyclone will lead to imports of a large quantity of food grains, construction materials and capital machinery, said the BB governor on arrival in the capital after a visit to the country's southern and southwestern cyclone-hit areas.
He said the central bank will also take into account the losses that the banks might show in their financial statements for disbursing credit at low rates of interest in the cyclone-hit areas.
"...Any previous error that shows up in their balance sheets will not be allowed," the central bank chief said, adding that the banks must play a pro-active role in disbursement of credit in the cyclone-hit areas.
The BB governor also instructed the banks to give special focus on the small and medium entrepreneurs (SME) including fisheries, salt industries and poultry farms while they disburse agro-credit in the Sidr-hit areas.
"We have asked the banks for taking necessary measures to rehabilitate the businessmen, who have lost their establishments during the cyclone, through disbursing fresh credit to them," the central bank chief added.
He also laid emphasis on proper distribution of agriculture inputs, including fertiliser, across the country.
The state-run Palli Karma Sahayak Foundation (PKSF) will provide a fund to its member non-government organisations (NGOs) to disburse interest-free credit.
The Micro-Credit Regulatory Authority (MRA) will sit with the leading NGOs to disburse their fund in the Sidr-affected districts at low rates of interest.
"We will hold meetings with the country's leading NGOs shortly to discuss ways to boost their financing activities in the cyclone-hit areas," the BB governor, who is also chairman of the MRA, said.
Some NGOs have already taken measures to stop their recovery drives in the cyclone-affected districts, he added.
The central bank has directed the banks for taking initiatives to achieve a minimum of 70 per cent to 80 per cent target of their farm credit disbursement by January next in the cyclone-hit areas.
"We have asked the banks, which are operating their business in the areas, to achieve the target for agriculture loan disbursements," Salehuddin noted.
He also said the central bank has also asked the banks to finance the fishermen forming a group after receiving guarantee from businessmen concerned.
The central bank has set the credit disbursement target at Tk 17.00 billion for government-owned banks and financial institutions for disbursement among cyclone-hit people.
The BB has set the overall credit target at Tk 81.92 billion, which includes Tk 13.47 billion from private commercial banks and the rest from government-owned banks and financial institutions for disbursement among farmers across the country.