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Bangladesh Bank (BB) Governor Abdur Rouf Talukder on Tuesday urged the private commercial banks (PCBs) to take necessary measures for raising credit flow to the agriculture sector.
He made the call during a meeting with the PCBs' top executives - to ensure food security in the country, according to a BB press release.
The central bank governor hailed the banks' timely initiatives in facilitating adequate supply of foods during the pandemic, and expressed hope that the banks would do the same in the coming days.
Bankers in the meeting responded positively to the BB governor's suggestion to raise farm credit disbursement target, set for the current fiscal year, Chairman of the Association of Bankers, Bangladesh (ABB) Selim R. F. Hussain told the FE.
The governor asked whether the farm credit disbursement target could be raised by around 3.0 per cent, he added.
When asked, Mr Hussain said the food situation in Bangladesh had not been too vulnerable yet.
He also suggested that necessary precautionary measures be taken to avert any possible grave situation.
About the contribution of the country's agriculture sector to the national economy, he said there is a need for enhancing the volume of agri credit for the sake of ensuring the country's food security.
The bankers opined that the banks would be able to achieve their agriculture sector credit target.
Seeking anonymity, a BB official said the central bank believes that there is risk of a global food crisis due to supply chain disruption, and prices of food grains are increasing for this reason. In such a situation, it is necessary to increase production to ensure the country's food security.
To this end, the central bank has already formed a refinancing fund of Tk 50 billion - to maintain the flow of loans to the agricultural sector at low interest rates.
According to the BB, only farmers would get loans from this fund. Small marginal farmers can take a single collateral-free loan up to Tk 0.20 million for cultivation of crops, including rice, vegetables, fruits and flowers.
According to the BB's agricultural and rural loan policies, loans can be disbursed only against related crop liability in the case of cultivation on a maximum of five acres of land.
As per the Integrated Food Security Phase Classification (IPC) Chronic Food Insecurity Situation in 2019-2024, Bangladesh has made significant progress in food security in recent years compared to many of its Asian counterparts, with over 58.5 million people, representing 36 per cent of the total population, facing mild chronic food insecurity, while 69.8 million people or 43 per cent of the total population, facing low chronic food insecurity.
Nearly 35 million people, representing 21 per cent of the total population, face moderate and severe chronic food insecurity, of which 11.7 million people or 7.0 per cent of the total population face severe chronic food insecurity, and 23.1 million people, or 14 per cent of the total population, face moderate chronic food insecurity.
Of the eight divisions in Bangladesh, Chattogram and Dhaka have the lowest proportion of moderate and severe chronic food insecure (CFI) people (18 per cent and 16 per cent respectively).
Rangpur division has the highest proportion of moderate and severe CFI people (31 per cent), followed by Barishal division (24 per cent), and Rajshahi division (23 per cent).