Farm credit disbursement made mandatory for all banks
Wednesday, 17 September 2008
FE Report
Agricultural credit disbursement will be made compulsory for all local and foreign commercial banks from the current fiscal year to ensure food security of the country.
"The central bank will take necessary measures immediately in this connection," Senior Deputy Governor of the Bangladesh Bank (BB) Nazrul Huda told reporters Tuesday after a meeting of the high-powered committee on agriculture credit.
The government earlier formed an 11-member committee to supervise and monitor disbursement of agricultural credit by the state-owned banks and financial institutions.
Mr. Huda has been made the convener of the committee while the General Manager of the Agricultural Credit and Special Programmes Department (ACSPD) of the central bank M Abdul Haque as member secretary of the committee.
Other members of the committee are the managing directors (MDs) of eight state-run banks and financial institutions and joint secretaries from the Ministry of Finance and Agriculture.
"The recent experience has made it clear that there is no alternative to investment in agriculture sector to face the challenge of food security in the global price situation," the deputy governor said while explaining the need for enhanced agro-credit.
The practice of directed lending has been dissolved since the inception of Financial Sector Reform Programme (FSRP) was undertaken in 1990, resulting in the freedom of the commercial banks whether they would provide agriculture credit or not, he added.
He said the central bank would not impose the credit target of the banks concerned, but would take measures to ensure a rational target.
"We'll impose a certain percentage of banks' annual credit to be earmarked for agriculture unless the banks comply with the directive on their own," the deputy governor noted.
The central bank earlier set an agriculture credit target of nearly Tk 94 billion for the current fiscal year, which is 13 percent more than the last fiscal year, considering the need for increasing food production through increasing investment in the sector.
"We will introduce a new mechanism of revolving crop credit limit for a three-year term to relieve farmers from applying afresh everytime they need loans," Mr. Huda disclosed.
He also said that the mechanism would facilitate the loan account of a farmer automatically renewed and the farmers would be entitled to a fresh crop loan without submitting any new application.
"We will ask the commercial banks to provide agro-credit using the farmers' ID card that has been issued by the Department Agriculture Extension (DAE) to avoid middlemen," the deputy governor noted.
The banks will be instructed to follow 'area approach' aiming to increase the flow of agro-credit based on the production of crops, he added.
Huda also said that the BB would also take steps to provide collateral-free agriculture loans to share-croppers and fishermen.
He also said that the District and Upazila Agriculture Credit Committees would be activated to supervise the supply of agriculture inputs like fertiliser and quality seeds to the farmers.
Agricultural credit disbursement will be made compulsory for all local and foreign commercial banks from the current fiscal year to ensure food security of the country.
"The central bank will take necessary measures immediately in this connection," Senior Deputy Governor of the Bangladesh Bank (BB) Nazrul Huda told reporters Tuesday after a meeting of the high-powered committee on agriculture credit.
The government earlier formed an 11-member committee to supervise and monitor disbursement of agricultural credit by the state-owned banks and financial institutions.
Mr. Huda has been made the convener of the committee while the General Manager of the Agricultural Credit and Special Programmes Department (ACSPD) of the central bank M Abdul Haque as member secretary of the committee.
Other members of the committee are the managing directors (MDs) of eight state-run banks and financial institutions and joint secretaries from the Ministry of Finance and Agriculture.
"The recent experience has made it clear that there is no alternative to investment in agriculture sector to face the challenge of food security in the global price situation," the deputy governor said while explaining the need for enhanced agro-credit.
The practice of directed lending has been dissolved since the inception of Financial Sector Reform Programme (FSRP) was undertaken in 1990, resulting in the freedom of the commercial banks whether they would provide agriculture credit or not, he added.
He said the central bank would not impose the credit target of the banks concerned, but would take measures to ensure a rational target.
"We'll impose a certain percentage of banks' annual credit to be earmarked for agriculture unless the banks comply with the directive on their own," the deputy governor noted.
The central bank earlier set an agriculture credit target of nearly Tk 94 billion for the current fiscal year, which is 13 percent more than the last fiscal year, considering the need for increasing food production through increasing investment in the sector.
"We will introduce a new mechanism of revolving crop credit limit for a three-year term to relieve farmers from applying afresh everytime they need loans," Mr. Huda disclosed.
He also said that the mechanism would facilitate the loan account of a farmer automatically renewed and the farmers would be entitled to a fresh crop loan without submitting any new application.
"We will ask the commercial banks to provide agro-credit using the farmers' ID card that has been issued by the Department Agriculture Extension (DAE) to avoid middlemen," the deputy governor noted.
The banks will be instructed to follow 'area approach' aiming to increase the flow of agro-credit based on the production of crops, he added.
Huda also said that the BB would also take steps to provide collateral-free agriculture loans to share-croppers and fishermen.
He also said that the District and Upazila Agriculture Credit Committees would be activated to supervise the supply of agriculture inputs like fertiliser and quality seeds to the farmers.