A NATIONAL English daily reported that two state-owned specialized banks established to give agricultural credits to peasants have deviated from the basic policy as they are showing more interest in giving loans for trade and commerce. This unusual scenario was revealed in a Bangladesh Bank report that said Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank have been investing in trade and commerce though the banks were established in 1973 and 1986 respectively with the sole purpose of providing loans to the agriculture sector. The violation of policy by the banks will adversely affect the country’s agricultural sector, and the marginal agri-growers in particular, where more than 50 percent of the total workforce is engaged.
It is sad that these two state-owned specialised banks are in bad shape while a series of loan scams have pushed the banking sector to the brink. The conscientious section of society are anxious over the future of state-owned agri-banks, following loan scams of the public banks, as BKB’s bad loans rose by 30.90 percent in the last year because of its growing tendency to lend money to the non-agricultural sector.
The central bank probe, conducted early this year, revealed that BKB’s loan for commercial and non-agricultural purposes is growing in the recent years which contributed to the increase of its default loans to more than Tk 4,000 crore and thus have a capital shortfall of Tk 6,000 crore. The amount of RAKUB loans to marginalised farmers is very small although its main purpose is to give loan to farmers who owned less than half an acre of arable land. The bank’s default loans climbed to Tk 1,460.48 crore and capital shortfall grew to Tk 650 crore. Tk 4,714.46 crore or 29 percent of the total bank loans are non-agricultural credit as of June 2014, the probe report said. Moreover, the central bank’s inspection team found no credibility of RAKUB information that 46.14 percent of the bank loans were given to marginalised farmers.
The percentage was very poor, about 7.5 percent, as reported by the central bank team that checked 10 branches of the bank in Rajshahi region. The probe report recommended that the government should discourage loans by the banks to the non-agricultural sector. The banks should be directed to disburse a certain amount of loans to the marginalised farmers.
In the line with the central banks’ suggestion, we call upon the government to design a mechanism so that BKB and RAKUB credit lines provided to businesses should remain confined for import of agricultural materials only. To sustain food security, the government should come out with a long-term plan to help the agricultural sector attain self-sufficiency with the help of the aforementioned banks. These specialised banks should not be allowed to grow into sick ones by providing credit to such areas for which they were not established.
