Central bank concerned at poor distribution of farm credit
Sunday, 7 October 2007
FE Report
The central bank is seriously concerned over the poor distribution of agriculture credit as state-owned banks during July-August period of the current fiscal could disburse only Tk 5.28 billion, which is less than half the expected level.
Against the backdrop of such dismal disbursement, the Bangladesh Bank (BB) high-ups visited different parts of the country to review the overall situation and find ways to overcome the situation.
A BB official, who has already visited Narsingdi and Tangail districts, told the FE that the farmers were unaware that they were entitled to getting fresh loans subject to rescheduling of their previous classified loans.
The central bank earlier relaxed the existing rules and regulations to allow the flood-affected farmers for taking fresh credit through rescheduling of their previous classified loans.
Under the measure, the banks are allowed to reschedule the agro-credit for one year by relaxing the existing down payment conditionality.
"We have asked the banks to strengthen the campaign about the relaxation in order to encourage the cultivators for taking fresh loans," the official added.
He also said the floodwater was receding very slowly in the countryside and this was another reason for poor disbursement of farm credits.
A total of Tk 68.44 billion agro-credit was earmarked for distribution among the flood-affected farmers through eight state-owned banks and financial institutions for fiscal 2007-08.
"We are continuously pursuing the banks for taking measures to attain the target by increasing disbursement of the agro-credit from now on," the BB official added. The actual disbursement position during the month would be ascertained shortly.
The central bank official, however, expects the flow of farm credit disbursement to increase in the month of September to meet the demand of the farmers.
The eight state-owned banks and financial institutions are: Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB), Bangladesh Rural Development Board (BRDB) and Bangladesh Samobaya Bank Limited (BSBL).
The loans are to be sanctioned for eight agro-based sub-sectors like crops, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation.
For the first time, 39 private commercial banks, both foreign and local, have allocated funds amounting to Tk 10.78 billion for the agricultural credit along with the eight state-owned banks and financial institutions.
Most of the private commercial banks have already taken steps to disburse the agro-credit to farmers in line with the central bank's instructions.
Besides, the central bank has asked its seven branch offices to intensify their monitoring at the field level to ensure availability of agriculture credit to the flood-hit farmers.
The central bank branches are located in Barisal, Bogra, Chittagong, Khulna, Rajshahi, Rangpur and Sylhet.
According to the BB's statistics, eight state-owned banks and financial institutions disbursed agricultural credit worth Tk 52.93 billion in fiscal 2006-07, which is over 83 per cent of the target of Tk 63.51 billion.
In 2005-06, the banks and financial institutions disbursed agricultural credit worth Tk 54.96 billion and in 2004-05 the amount was Tk 49.57 billion.
On the other hand, the recovery of agro-credit stood at Tk 4.14 billion compared to Tk 4.97 billion during the July-August period of the current fiscal, the BB's data showed.
However, the position of overdue agriculture credit as percentage of total outstanding deteriorated, increasing from 44.03 per cent at the end of August, 2006 to 45.39 per cent at the end of August this year.
The central bank is seriously concerned over the poor distribution of agriculture credit as state-owned banks during July-August period of the current fiscal could disburse only Tk 5.28 billion, which is less than half the expected level.
Against the backdrop of such dismal disbursement, the Bangladesh Bank (BB) high-ups visited different parts of the country to review the overall situation and find ways to overcome the situation.
A BB official, who has already visited Narsingdi and Tangail districts, told the FE that the farmers were unaware that they were entitled to getting fresh loans subject to rescheduling of their previous classified loans.
The central bank earlier relaxed the existing rules and regulations to allow the flood-affected farmers for taking fresh credit through rescheduling of their previous classified loans.
Under the measure, the banks are allowed to reschedule the agro-credit for one year by relaxing the existing down payment conditionality.
"We have asked the banks to strengthen the campaign about the relaxation in order to encourage the cultivators for taking fresh loans," the official added.
He also said the floodwater was receding very slowly in the countryside and this was another reason for poor disbursement of farm credits.
A total of Tk 68.44 billion agro-credit was earmarked for distribution among the flood-affected farmers through eight state-owned banks and financial institutions for fiscal 2007-08.
"We are continuously pursuing the banks for taking measures to attain the target by increasing disbursement of the agro-credit from now on," the BB official added. The actual disbursement position during the month would be ascertained shortly.
The central bank official, however, expects the flow of farm credit disbursement to increase in the month of September to meet the demand of the farmers.
The eight state-owned banks and financial institutions are: Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, Bangladesh Krishi Bank (BKB), Rajshahi Krishi Unnayan Bank (RAKUB), Bangladesh Rural Development Board (BRDB) and Bangladesh Samobaya Bank Limited (BSBL).
The loans are to be sanctioned for eight agro-based sub-sectors like crops, irrigation equipment, livestock, agricultural products marketing, fisheries and poverty alleviation.
For the first time, 39 private commercial banks, both foreign and local, have allocated funds amounting to Tk 10.78 billion for the agricultural credit along with the eight state-owned banks and financial institutions.
Most of the private commercial banks have already taken steps to disburse the agro-credit to farmers in line with the central bank's instructions.
Besides, the central bank has asked its seven branch offices to intensify their monitoring at the field level to ensure availability of agriculture credit to the flood-hit farmers.
The central bank branches are located in Barisal, Bogra, Chittagong, Khulna, Rajshahi, Rangpur and Sylhet.
According to the BB's statistics, eight state-owned banks and financial institutions disbursed agricultural credit worth Tk 52.93 billion in fiscal 2006-07, which is over 83 per cent of the target of Tk 63.51 billion.
In 2005-06, the banks and financial institutions disbursed agricultural credit worth Tk 54.96 billion and in 2004-05 the amount was Tk 49.57 billion.
On the other hand, the recovery of agro-credit stood at Tk 4.14 billion compared to Tk 4.97 billion during the July-August period of the current fiscal, the BB's data showed.
However, the position of overdue agriculture credit as percentage of total outstanding deteriorated, increasing from 44.03 per cent at the end of August, 2006 to 45.39 per cent at the end of August this year.