Rajshahi Krishi Unnayan Bank (RAKUB) has sought government guarantee against a loan of Tk 10 billion from the central bank's refinancing scheme, sources said.
Recently, it wrote to the Financial Institutions Division (FID) seeking the guarantee, and accordingly, the FID forwarded the letter to the Finance Division requesting issuance of such a guarantee.
The state-owned specialised bank sought the loan from the Bangladesh Bank (BB) at bank rate (4.0 per cent) to strengthen its lending activities in the agriculture sector, officials said.
They said the specialised bank has set a target to disburse Tk 32.50 billion for the current fiscal year (FY 2022-23), which is Tk 2.50 billion higher than the previous FY's target of Tk 30 billion.
The bank has sought the loan to expedite its lending activities at a time when the government asked its relevant agencies to boost agriculture production amid global food insecurity.
Different UN bodies as well as multilateral development organisations have also expressed concerns over the possible food insecurity in 2023.
The state-owned bank disburses 60 per cent of its total loan portfolio for the purposes of poverty alleviation and facilitating agriculture production.
The bank has set a deposit collection target of Tk 30 billion in the current FY so that it can expand the lending activities, according to official figures.
To get the fund, RAKUB however requires obtaining a state guarantee against the loan, and accordingly, it wrote recently to the Financial Institutions Division (FID) which forwarded the letter to the Finance Division for taking necessary steps in this regard.
When contacted, an official of the finance division said: "We've received a letter in this regard and are working on it."
In FY 2021-22, the bank disbursed more than Tk 31.83 billion in loans, exceeding the target of Tk 30 billion.
In the letter, RAKUB Managing Director ZAHIDUL Haque said that different private commercial banks collect deposits at higher interest rates but it is not possible for the RAKUB to collect deposits at higher interest rates like that of the commercial banks.
Achieving profit is being narrowed due to disbursing loans at 8.0 per cent as decided by the government, he added.
The overall activities of the bank will be affected if it operates the normal loan activities and makes loan repayment to the BB. Under this circumstance, a state guarantee is needed to receive the loan, said an official.
The RAKUB, the largest lender to the agriculture sector in the northwest region, aims to contribute to overall development of farmers and all the sectors and sub-sectors of agriculture in this region.
Characterised by the surplus food grain production, Rajshahi and Rangpur divisions are popularly called the "granary of the country".
There are 383 branches of the bank including LPO and Dhaka branch among which 194 are in Rajshahi and 187 in Rangpur division. Number of rural branches are 333 while urban 50.
The authorised capital of the bank is Tk 10 billion and paid-up capital Tk 8.25 billion.
The RAKUB's headquarters is located in Rajshahi.