Tk 155.50b farm loan to be disbursed this year

The Bangladesh Bank (BB) Monday unveiled the agricultural and rural credit policy for the current fiscal year, fixing target at Tk 155.50 billion, which is 6.54 per cent more than that of the just-concluded fiscal year.
The BB formally launched the policy in presence of senior bankers of the scheduled banks at a programme held at the Bangladesh Bank.
BB Governor Dr. Atiur Rahman unveiled the 'Agricultural and Rural Credit Policy and Programme for the 2014-15'.
According to the BB, the scheduled banks had disbursed 10 per cent higher agricultural loan in the last fiscal year against the target.
The BB said agricultural loan performance will be considered as an integral part of management while assessing CAMELS, a rating adopted by the central bank for the banks.
Speaking at the programme, the BB Governor said agricultural credit has now turned into a mainstream loan in the banking sector. He said  the banks have been disbursing loans to the farmers spontaneously.
Dr Atiur Rahman said disbursement of agricultural loan ensures financial stability. "Providing loans to the farmers is a part of financial stability."
He said big clients often fail to repay instalments of loans. It is hard to recover the money from them, he said adding: "Farmers usually do not default and they repay the loans timely."
The BB governor said agricultural loan is also helping attain the goals of the monetary policy. "We want to keep inflation lower through monetary tools. Providing agricultural loans will help lower prices of essentials," Dr Rahman said.
"Our food inflation remains at least 2.0 per cent lower than that of the neighbouring country and this is because of better domestic agricultural production," he noted.
The BB governor made an appreciation note for agricultural loan disbursement performance of the foreign banks.
Speaking at the programme, deputy governor SK Sur Chowdhury said all private and foreign banks will have to disburse at least 2.5 per cent of their total credits.
But newly-launched nine private commercial banks will have to disburse 5.0 per cent of their total loans as rural credit.
Mr Sur said Bangladesh went 11 notches up in one year in South Asia in terms of the hunger index.
He said the interest rate for agricultural term-loan has remained at 13 per cent. "This should be lowered as overall rate of interest has dropped by more than 2.0 per cent."
He said the interest rate should be over 10 per cent.
Mr Sur said the central bank has introduced a refinancing scheme worth Tk 2.0 billion to inject  dynamism into the rural economy.
"You (banks) can avail this scheme and disburse loans to the Tk 10-account holders," he said. Chairman of the Association of Bankers, Bangladesh (ABB) said Ali Reza Iftekhar said the private commercial banks are likely to achieve the loan disbursement targets set for the 2014-15 fiscal year.
According to the policy document, of the Tk 155.50 billion, targets for the Bangladesh Krishi Bank and the Rajshahi Krishi Unnyan Bank have been fixed at Tk 64.0 billion.
Targets for the four state-owned commercial banks have been fixed at Tk 27.40 billion.
Nine foreign banks will have to disburse Tk 4.20 billion farm loan while 39-private commercial banks Tk 59.90 billion.