Bangladesh Bank to strengthen farm loan monitoring to facilitate agriculture production

Jul-Aug farm credit flow rises 35pc

Siddique Islam | Published: September 20, 2017 10:36:50 | Updated: October 25, 2017 05:05:18

The agriculture loans disbursement grew by more than 35 per cent or Tk 7.31 billion in the first two months of the current fiscal year. In this file photo, a farmer seen planting rice in a paddy field. - FE photo

The central bank is going to strengthen its monitoring and supervision for ensuring hassle-free disbursement of farm loans, particularly in the flood-affected areas, to facilitate boosting agriculture production.


As part of the move, 10 branch offices of Bangladesh Bank (BB) have already been instructed for taking effective measures to ensure proper disbursement of the loans across the country.


"We've taken the latest initiative for providing adequate credit support to the farmers in time without any harassment to facilitate the overall agriculture production," a BB executive director told the FE Tuesday.


He said the BB officials would use mobile phones as an instrument to strengthen their monitoring.


"The BB is also working to revise provisioning requirement against unclassified agriculture loans to encourage the banks for disbursing more farm credits in future," the executive director said, without elaborating.


Currently, the banks have to keep 2.50 per cent provision against unclassified agriculture loans.


Meanwhile, the agriculture loans disbursement grew by more than 35 per cent or Tk 7.31 billion in the first two months of the current fiscal year (FY), thanks to a strengthened monitoring and supervision by the central bank.


Disbursement of the loans rose to Tk 27.94 billion during the July-August period of FY 2017-18 from Tk 20.63 billion in the same period of last FY, according to the central bank's latest statistics.


Of the Tk 27.94 billion, eight state-owned banks disbursed Tk 8.09 billion and the remaining Tk 19.85 billion by the private commercial banks (PCBs) and foreign commercial banks (FCBs).


All scheduled banks have achieved nearly 13.70 per cent of their total annual agricultural loans disbursement target for the FY18, fixed at Tk 204 billion.


The recovery of farm loans, however, rose to Tk 28.66 billion during the period under the review from Tk 21.35 billion in the same period of the FY 17.


The central bank is set to review the performances of agriculture credit disbursement and recovery of eight state-owned banks at a meeting, which is scheduled to be held in the central bank headquarters in Dhaka on September 26.


"We'll advice the public banks at the meeting to accelerate disbursement of the farm credits in the coming months to facilitate the farmers, particularly the flood-hit ones," another BB official said.


The eight state-owned banks are: Sonali Bank Limited, Janata Bank Limited, Agrani Bank Limited, Rupali Bank Limited, BASIC Bank Limited, Bangladesh Development Bank Limited (BDBL), Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB).


The official said the central bank will also review the performances of both agriculture credit disbursement and recovery of all PCBs and FCBs in October to know the overall situation.


"We're also advising all the banks to follow the fresh policy on rescheduling short-term agriculture, micro-credit and SME loans to help the flood-affected borrowers continue their economic activities," the central banker added.


The banks are now allowed to reschedule such loans based on 'banker-client' relationship through relaxation of down payment requirements, according to the latest policy, issued by the BB on August 22, 2017.


Under the policy, the flood-affected farmers and entrepreneurs will be eligible for getting fresh loans without depositing any compromised amount after rescheduling such loans.


Such rescheduled facility will continue until June 30 next year.



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