Published :
Updated :
For all latest news, follow The Financial Express Google News channel.
Access to finance is a big barrier to mechanization in farming in Bangladesh and so the lenders should do more to support the agriculture sector.
"Smallholder farmers and agri-businesses in Bangladesh continue to face significant barriers in accessing the financial resources they need to thrive," reads a press release issued by the USAID.
An USAID study, implemented by Palladium International in partnership with SAJIDA Foundation, dug up the findings that were made public on Thursday at a workshop in the capital.
The Inclusive Access to Finance (IAF) Activity was aimed at addressing the challenges and improving the access to finance in the agriculture sector.
The event brought together policymakers, high officials from financial institutions, and other key stakeholders to validate the preliminary findings of the assessment "Access to Finance Landscape and Inclusive Development in Bangladesh" (AFLID).
The workshop featured discussions and valuable insights on the findings of the assessment.
The preliminary findings from the assessment showed that lending institutions come across factors including high operating costs, information asymmetry, a lack of financial literacy among borrowers, and unpredictable weather while considering loan disbursement to farmers.
The participants spoke of opportunities to improve agriculture financing through specialised credit products, better operational efficiency, a stronger and digitalised system for assessing and distributing loans, and collaboration between the regulators and lending institutions.
Kazi Rafiqul Hassan, executive director of the Bangladesh Bank, the chief guest at the event, emphasized the government's commitment to addressing the barriers faced by the agriculture sector stakeholders.
"The SME department of the central bank is enforcing a rule that requires 25 per cent of the total portfolio of banks' loans and advances to be allocated to the SME sector."
Moreover, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank are dedicated to agricultural financing, which will further enhance inclusive accessibility of agricultural funding, Mr Hassan added.
Joseph Lessard, director of the Office of Economic Growth, USAID Bangladesh, emphasised the need for all stakeholders to work together - "Achieving inclusive access to finance in Bangladesh is a complex challenge, particularly due to the challenges in reaching farmers, and other underserved communities in a cost-effective manner and with financial services that meet their needs."
The government and the private sector must play important roles in creating an ecosystem of financial services that meet the needs of farmers and agribusinesses, he said.