Farmers' accessibility to institutional credit
Thursday, 4 December 2008
IT is important to identify the points of strength and weakness in our entire economic system. A small basket of export items, where garment products dominate, and the remittances sent home by the expatriate wage earners, provide us with the much needed foreign exchange for our trade and other financial transactions with the rest of the world. So, this fragile export base, which, again is exposed to the insecurities of external origin, is yet to reach the stage when we may call ourselves an export-based economy. Our domestic industries are yet to employ the huge mass of the unemployed, the number of which is increasing every year. So it is still agriculture that dominates the socio-economic scene.
But, unlike many rich countries that have enough foreign exchange to import food for their citizens, we are yet to depend mainly on our poor old agriculture to feed the population. Our vulnerability to the external factors was again exposed when food grain prices in the international market skyrocketed, while our farmers were battered by natural calamities and crop failure. To make things further worse, the traditional exporters of food grains, too, were not forthcoming with their surpluses in the market. Bangladesh was thrown into a very precarious situation to ensure adequate supply of food at an affordable cost for the people. In this critical time in the life of the nation, the poverty-ridden, half-fed and ill-equipped peasantry, in spite of the reverses it had to face earlier, came to the rescue of the nation through bumper production. To all intents and purposes, this year, too, they are going to achieve a similar feat.
To cut a long story short, in spite of the big prospects of other sectors of the economy including the export, the service, the general trading and the manufacturing, the agriculture, despite its declining share in the GDP, is still proving to be its main stay as it feeds the nation as well as employs the majority of the population. Under the circumstances, what should then be the order of the priorities so far as the future development of the economy is concerned? As before, it should be the agriculture. But in spite of its importance, it has the least bargaining power to have access to the resources of the government.
One of the vital resources under the government's disposal is its finance and more specifically, its bank credit facility. The peasantry of the country are still not in a comfortable position to have direct access to the credit facilities made available through the banks. It is still the better-off section of the population who can largely enjoy this financial resource of the government. The peasantry lacks the knowledge and skill to fill in the complicated forms or fulfil other conditions to satisfy the bank officials, even at the specialised banks and other financial institutions that provide credit to the farmers. Irregularities in the financial institutions and the menace of the middlemen always come in the way of affordable access of the institutional credit facilities to the cash-strapped farmers when they need it most.
Against this backdrop, it is heartening to learn that the central bank is going to refinance the private commercial banks (PCBs) so that they may extend agricultural credit facilities to the farmers. What is of further significance is that it has been made mandatory for the local and foreign banks to disburse agricultural credit from the fund to be provided by the central bank. Meanwhile, the specialised banks, namely, Bangladesh Krishi Bank (BKB) and the Rajshahi Krishi Unnayan Bank (RAKUB) have already been provided with Taka 5.0 billion and Taka 2.0 billion respectively to extend credit facility for the farmers. Undoubtedly, the steps taken by the central bank bode well for the farmers of the country. But what is more important than just approving the agricultural credit fund to the banks is creating the proper environment for the farmers to have easy access to the credit without any hassle whether from the bank officials or from the middlemen.
But, unlike many rich countries that have enough foreign exchange to import food for their citizens, we are yet to depend mainly on our poor old agriculture to feed the population. Our vulnerability to the external factors was again exposed when food grain prices in the international market skyrocketed, while our farmers were battered by natural calamities and crop failure. To make things further worse, the traditional exporters of food grains, too, were not forthcoming with their surpluses in the market. Bangladesh was thrown into a very precarious situation to ensure adequate supply of food at an affordable cost for the people. In this critical time in the life of the nation, the poverty-ridden, half-fed and ill-equipped peasantry, in spite of the reverses it had to face earlier, came to the rescue of the nation through bumper production. To all intents and purposes, this year, too, they are going to achieve a similar feat.
To cut a long story short, in spite of the big prospects of other sectors of the economy including the export, the service, the general trading and the manufacturing, the agriculture, despite its declining share in the GDP, is still proving to be its main stay as it feeds the nation as well as employs the majority of the population. Under the circumstances, what should then be the order of the priorities so far as the future development of the economy is concerned? As before, it should be the agriculture. But in spite of its importance, it has the least bargaining power to have access to the resources of the government.
One of the vital resources under the government's disposal is its finance and more specifically, its bank credit facility. The peasantry of the country are still not in a comfortable position to have direct access to the credit facilities made available through the banks. It is still the better-off section of the population who can largely enjoy this financial resource of the government. The peasantry lacks the knowledge and skill to fill in the complicated forms or fulfil other conditions to satisfy the bank officials, even at the specialised banks and other financial institutions that provide credit to the farmers. Irregularities in the financial institutions and the menace of the middlemen always come in the way of affordable access of the institutional credit facilities to the cash-strapped farmers when they need it most.
Against this backdrop, it is heartening to learn that the central bank is going to refinance the private commercial banks (PCBs) so that they may extend agricultural credit facilities to the farmers. What is of further significance is that it has been made mandatory for the local and foreign banks to disburse agricultural credit from the fund to be provided by the central bank. Meanwhile, the specialised banks, namely, Bangladesh Krishi Bank (BKB) and the Rajshahi Krishi Unnayan Bank (RAKUB) have already been provided with Taka 5.0 billion and Taka 2.0 billion respectively to extend credit facility for the farmers. Undoubtedly, the steps taken by the central bank bode well for the farmers of the country. But what is more important than just approving the agricultural credit fund to the banks is creating the proper environment for the farmers to have easy access to the credit without any hassle whether from the bank officials or from the middlemen.