Abu Sazzad :
Some renowned Private Commercial Banks (PCBs) and Foreign Commercial Banks (FCBs) are repeatedly failed to achieve their annual agriculture loan disbursement target by violating the central banks guidelines.
Actually, some PCBs and FCBs are ignoring to allocate farm loan across the country to reduce their credit risk, experts said.
About 37.59 per cent of the target for Agricultural Credit disbursement has been achieved in the first five months (July to November) of the current fiscal 2015-16.
Bangladesh Bank (BB) has launched its agricultural and rural credit policy for the current fiscal year, setting a target for disbursing Tk16,400 crore in farm loans. All banks disbursed Tk 6,165 crore in the first five months of the ongoing fiscal.
Experts opined that al least 50 per cent loan should be disbursed in the five months.
Actually, some renowned private commercial banks and foreign commercial banks repeatedly failed to achieve their yearly disbursement target. Bangladesh Bank should strict in this regard, pointed the experts.
They said, all banks including foreign banks should come forward to disburse the farm loans to bring financial stability by promoting cultivation.
Bangladesh Bank Deputy Governor SK Sur Chowdhury also requested the banks to reduce their interest rates on farm loan. He also asked the banks to disburse farm loan through micro finance institutions so the rural people could get the loans.
“Agriculture loan has been set at 2.5 per cent of the total loans for all the banks and 5 percent for new nine banks. The loan recovery was 70 percent during the last fiscal year, which was also satisfactory,” he added.
He, however, advised the banks to focus on the significant sectors while disbursing farm loans.
In fiscal year 2013-14, banks disbursed about Tk16,037 crore, exceeding the target of Tk 14,595 crore.
Of the disbursed amount of agriculture and rural credit, Tk1612 crore had been disbursed among almost 33 lakh people, of which nearly six lakh were female.
During the period, 24.85 lakh small and marginal farmers got Tk10,648.88 crore while 23,976 farmers got Tk48.36 crore from different banks.
“We have always achieved the agriculture credit target set by the central bank and we are confident that schedule banks will be able to continue this trend this year too,” said Association of Bankers Bangladesh (ABB) President Ali Reza Iftekhar.
Seven banks failed to achieve agriculture loan disbursement target in the first two months (July to August) of the current fiscal 2015-16. Most of these banks, most of the banks are foreign commercial banks (FCBs). These banks are Bank Al-Falah, Citibank NA, Commercial Bank of Ceylon, Habib Bank, National Bank of Pakistan, State Bank of India and Farmers Bank.
The banks are now being compelled to disburse the farm loan in line with their financial year’s target as the central bank had earlier said that they (banks) would have to deposit the entire fund of their undisbursed agriculture loans in a blocked account with the BB, said the Bangladesh Bank Deputy Governor Nazneen Sultana.
The central bank took the move as a punishment measure. The central bank implemented the rule from this financial year, she also said. The BB will return the fund to the respective banks if they disburse the undisbursed amount with their fresh targets for the next financial year, also said the BB official.
For this reason, the banks are now more cautious to fulfill their annual farm loan disbursement target to avoid the punishment measure set by the central bank, he said.
A senior BB official said, the central bank had already asked the banks to speed up the farm loan disbursement programme.
Bangladesh Bank reduced the interest rate on farm loan to 11 per cent from 13 per cent in December 2014, which also played a significant role in increasing the disbursement of the agriculture loan.
Center Policy Dialogue (CPD) Executive Director Mustafizur Rahman said, every year PCBs failed to fulfill their disbursement target due to their illogical banking policy.
They (PCBs) do not have any rural branches, so they deliberately avoid the disbursement target, he claimed.
On the other hand, Foreign Commercial Banks(FCBs) did not distribute any farm loan during this period. According to a senior official of FCB said that FCBs have no rural branch across the country as a result they failed to disburse agriculture and SME loan.
Mustafizur Rahman suggested that PCBs and FCBs can make a liaison with the Micro Finance Institutions (MFIs) to achieve their disbursement target of SME and agriculture loan, which will reduce the risk management factors.
Adequate SME and agriculture loan are important to attain a sustainable economy, he pointed.
Some renowned Private Commercial Banks (PCBs) and Foreign Commercial Banks (FCBs) are repeatedly failed to achieve their annual agriculture loan disbursement target by violating the central banks guidelines.
Actually, some PCBs and FCBs are ignoring to allocate farm loan across the country to reduce their credit risk, experts said.
About 37.59 per cent of the target for Agricultural Credit disbursement has been achieved in the first five months (July to November) of the current fiscal 2015-16.
Bangladesh Bank (BB) has launched its agricultural and rural credit policy for the current fiscal year, setting a target for disbursing Tk16,400 crore in farm loans. All banks disbursed Tk 6,165 crore in the first five months of the ongoing fiscal.
Experts opined that al least 50 per cent loan should be disbursed in the five months.
Actually, some renowned private commercial banks and foreign commercial banks repeatedly failed to achieve their yearly disbursement target. Bangladesh Bank should strict in this regard, pointed the experts.
They said, all banks including foreign banks should come forward to disburse the farm loans to bring financial stability by promoting cultivation.
Bangladesh Bank Deputy Governor SK Sur Chowdhury also requested the banks to reduce their interest rates on farm loan. He also asked the banks to disburse farm loan through micro finance institutions so the rural people could get the loans.
“Agriculture loan has been set at 2.5 per cent of the total loans for all the banks and 5 percent for new nine banks. The loan recovery was 70 percent during the last fiscal year, which was also satisfactory,” he added.
He, however, advised the banks to focus on the significant sectors while disbursing farm loans.
In fiscal year 2013-14, banks disbursed about Tk16,037 crore, exceeding the target of Tk 14,595 crore.
Of the disbursed amount of agriculture and rural credit, Tk1612 crore had been disbursed among almost 33 lakh people, of which nearly six lakh were female.
During the period, 24.85 lakh small and marginal farmers got Tk10,648.88 crore while 23,976 farmers got Tk48.36 crore from different banks.
“We have always achieved the agriculture credit target set by the central bank and we are confident that schedule banks will be able to continue this trend this year too,” said Association of Bankers Bangladesh (ABB) President Ali Reza Iftekhar.
Seven banks failed to achieve agriculture loan disbursement target in the first two months (July to August) of the current fiscal 2015-16. Most of these banks, most of the banks are foreign commercial banks (FCBs). These banks are Bank Al-Falah, Citibank NA, Commercial Bank of Ceylon, Habib Bank, National Bank of Pakistan, State Bank of India and Farmers Bank.
The banks are now being compelled to disburse the farm loan in line with their financial year’s target as the central bank had earlier said that they (banks) would have to deposit the entire fund of their undisbursed agriculture loans in a blocked account with the BB, said the Bangladesh Bank Deputy Governor Nazneen Sultana.
The central bank took the move as a punishment measure. The central bank implemented the rule from this financial year, she also said. The BB will return the fund to the respective banks if they disburse the undisbursed amount with their fresh targets for the next financial year, also said the BB official.
For this reason, the banks are now more cautious to fulfill their annual farm loan disbursement target to avoid the punishment measure set by the central bank, he said.
A senior BB official said, the central bank had already asked the banks to speed up the farm loan disbursement programme.
Bangladesh Bank reduced the interest rate on farm loan to 11 per cent from 13 per cent in December 2014, which also played a significant role in increasing the disbursement of the agriculture loan.
Center Policy Dialogue (CPD) Executive Director Mustafizur Rahman said, every year PCBs failed to fulfill their disbursement target due to their illogical banking policy.
They (PCBs) do not have any rural branches, so they deliberately avoid the disbursement target, he claimed.
On the other hand, Foreign Commercial Banks(FCBs) did not distribute any farm loan during this period. According to a senior official of FCB said that FCBs have no rural branch across the country as a result they failed to disburse agriculture and SME loan.
Mustafizur Rahman suggested that PCBs and FCBs can make a liaison with the Micro Finance Institutions (MFIs) to achieve their disbursement target of SME and agriculture loan, which will reduce the risk management factors.
Adequate SME and agriculture loan are important to attain a sustainable economy, he pointed.
