Lagging disbursement of agricultural loans
Thursday, 20 September 2007
ALTHOUGH the government was found quite well aware of the need to disburse agricultural loans in significantly higher amounts following the flood to aid in agriculture's recovery, the right policy decision appears to be getting frustrated at the implementation stage at the field level. Reports in the media have indicated that the disbursement of these loans is going on at a lackadaisical pace. The flow of the loans has actually decreased to farmers when the fastest receipt of the same in right proportions are needed in many cases by them to be able to resume production activities fully after the flood. The loans would be utilised to buy seeds, fertilisers and other inputs -- promptly -- to engage in compensatory activities after the large scale destruction of paddy plants and other crops by the flood. In some areas, seedlings planted after the first round of flood were destroyed again in the second round of flooding. The immediate disbursement of institutional loans in all such affected areas is crucial for the farmers to acquire some capacity to try and make up for their flood-related losses.
The target was set for disbursement of a total amount of some Taka 66.19 billion as agricultural loans even before the flood waters had subsided. But the problem is not availability of funds for distribution as agricultural loans but the administration aspects of such loan disbursement. Krishi Bank and the nationalised commercial banks (NCBs) should play leading roles in distributing these loans efficiently. But the rate of disbursement continues to be so laggard that Bangladesh Bank (BB) had to write to the management of the NCBs to step up the rate of disbursement. A survey covering the period until the end of August showed a rather unsatisfactory situation in relation to disbursement. The Krishi Bank, which is a specialised bank designed to support agriculture, has failed to meet targets in this regard. The same applies to the NCBs. Reportedly, the three state-owned banks could disburse Taka 730 million in aggregate as agricultural loans in the July-August period. This is too small an amount compared to what has been earmarked for distribution as loans for agriculture sector's full recovery following the flood.
Poor monitoring and supervision at the field levels are at the root of such a slow pace in the distribution of loans although from the highest levels of the government, great stress is being laid to this task. The state-owned banks which have been given the responsibility to manage this special post-flood agricultural loan programme, are short of supervisory manpower needed to do the work competently. General managers and deputy general managers who usually conduct credit operations of these banks, are not available in many posts. But these officials discharge supervisory and promotional duties at the field levels and the lack of such services is preventing the special agricultural loan operation from being run at the required speed and efficiency. Clearly, the supervision and monitoring issues need to be addressed immediately for giving a spur to the distribution process of agricultural loans.
No less important is running cleanly the loan programme. The borrowing costs -- formal and informal -- are very important for the farmers while availing themselves of the loan facilities. Understandably, the NCBs are doing their best, despite their many operational constraints, to disburse agri-credits to the targets groups cost-effectively. All efforts should further be geared up right at this stage by all these banks involved in delivery of agri-credits to ensure the widest possible coverage of farmers in transparent ways under the related loan disbursement programme. Supervision and monitoring activities have to be streamlined by all concerned for the purpose in this difficult year for farmers.
The target was set for disbursement of a total amount of some Taka 66.19 billion as agricultural loans even before the flood waters had subsided. But the problem is not availability of funds for distribution as agricultural loans but the administration aspects of such loan disbursement. Krishi Bank and the nationalised commercial banks (NCBs) should play leading roles in distributing these loans efficiently. But the rate of disbursement continues to be so laggard that Bangladesh Bank (BB) had to write to the management of the NCBs to step up the rate of disbursement. A survey covering the period until the end of August showed a rather unsatisfactory situation in relation to disbursement. The Krishi Bank, which is a specialised bank designed to support agriculture, has failed to meet targets in this regard. The same applies to the NCBs. Reportedly, the three state-owned banks could disburse Taka 730 million in aggregate as agricultural loans in the July-August period. This is too small an amount compared to what has been earmarked for distribution as loans for agriculture sector's full recovery following the flood.
Poor monitoring and supervision at the field levels are at the root of such a slow pace in the distribution of loans although from the highest levels of the government, great stress is being laid to this task. The state-owned banks which have been given the responsibility to manage this special post-flood agricultural loan programme, are short of supervisory manpower needed to do the work competently. General managers and deputy general managers who usually conduct credit operations of these banks, are not available in many posts. But these officials discharge supervisory and promotional duties at the field levels and the lack of such services is preventing the special agricultural loan operation from being run at the required speed and efficiency. Clearly, the supervision and monitoring issues need to be addressed immediately for giving a spur to the distribution process of agricultural loans.
No less important is running cleanly the loan programme. The borrowing costs -- formal and informal -- are very important for the farmers while availing themselves of the loan facilities. Understandably, the NCBs are doing their best, despite their many operational constraints, to disburse agri-credits to the targets groups cost-effectively. All efforts should further be geared up right at this stage by all these banks involved in delivery of agri-credits to ensure the widest possible coverage of farmers in transparent ways under the related loan disbursement programme. Supervision and monitoring activities have to be streamlined by all concerned for the purpose in this difficult year for farmers.