Rajshahi Krishi Unnayan Bank (RAKUB) has sought further extension of the state guarantee for its Tk 10 billion pre-finance loan for another year to avert a severe liquidity crisis and ensure uninterrupted agricultural lending.
In a letter the Acting Managing Director of the specialized bank, Md. Golam Mortuza, has requested the Financial Institutions Division under the Ministry of Finance for extending the validity of the state guarantee for one more year.
According to the letter, the RAKUB secured a three-year pre-finance loan amounting to Tk 10 billion from Bangladesh Bank (BB) to run its "Special Agricultural and Rural Credit" program.
The state guarantee against such loan was previously extended by one year until August 31, 2026, it was learnt.
The fund was disbursed among farmers at an 8.0 per cent rate of interest in three fiscal years--Tk 5.0 billion in the fiscal year 2022-23 (1st & 2nd instalments), Tk 2.50 billion in the FY 2023-24 (3rd instalment) and Tk 2.5 billion in the FY 2024-25.
The RAKUB management in the letter highlighted that agricultural and rural credit demands are rising sharply due to expanding farming activities across the country. There is currently a massive demand for loans ahead of the upcoming Aman, Boro, and winter vegetable farming seasons.
The bank also warned that forcing full recovery of these loans from marginal and small-scale farmers at the present moment to repay the central bank loan would heavily disrupt domestic agricultural production.
Furthermore, due to the ongoing economic landscape, it is not possible for the RAKUB to mobilise the required amount of deposits for the recovery of the loan.
Taking the overall financial condition of RAKUB into consideration, it is crucial for extending the state guarantee against the Tk 10 billion loan for another year to help run the 'Special Agricultural and Rural Credit' program, the bank said in its letter.
"Otherwise, the bank will fall into a severe liquidity crisis," it added.
Despite having the strain, the letter underscores that RAKUB has been steadily reducing its outstanding loan balance with BB, it mentioned.
Until June 4, 2026 of the current fiscal year 2025-2026, the RAKUB has repaid a total of Tk 10 billion in pre-finance, blocked, and demanded loans against its withdrawal of Tk 860 million.
Additionally, the bank is regularly paying its bi-annual instalments of Tk 249 million for its blocked loans, according to the bank.
An official, however, said the bank's application is currently under consideration by the Financial Institutions Division.
If approved, the extension will give the bank breathing space, thus keeping its lending activities uninterrupted for the sake of the country's food security.
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