PCBs reluctant on agro loan
Md Ahsan Ullah: Country’s private commercial banks are applying ‘go-slow policy’ to disburse the agriculture loan under stimulus loan package mainly due to higher operational cost, hindering the agriculture production and future food security in the country.
Most of the public banks have almost distributed their loan share, but the private commercial are still lagging behind disbursing the loan share amount worth Tk 737 crore.
So far, some 43 banks signed agreement with the central bank to disburse the loan package for minimizing the loss of the agriculture sector.
Although Bangladesh Bank asked banks to disburse such loan by September, but the banks distributed only 44 percent loan amount till date, said a BB sources. Finding no other alternative, the Bangladesh Bank recently extended the date up to December this year. BB also issued memo to 19 banks for disbursing poor loan amount. These banks are Bangladesh Commerce Bank, IFIC Bank, Jamuna Bank, NRB Bank, NRB Global Bank, Simanto Bank, Southeast Bank, Standard Bank, Union Bank, Basic Bank, AB Bank, Dhaka Bank, Mutual Trust Bank, Prime Bank, Social Islami Bank, South Bangla Agriculture and Commerce Bank, Trust Bank and United Commercial Bank.
It is very interesting that the authorities concerned of One Bank and Modhumoti Bank did not distributed even any single penny on behalf of the farmers under stimulus loan packages.
On the other hand, disbursement of farm loans by banks in the first two months (July to August) of the current fiscal year remained below the strategic target. Scheduled banks made only 13.15 per cent of the annual disbursement target during the July-August period of this fiscal, according to a central bank official. More than Tk 110.45 billion will be disbursed by state-owned banks and the remaining Tk 152.47 billion by private and foreign commercial banks.
However, experts have expressed their deep concern for slow disbursement of the agriculture credit that may affect the production. They have underscored the need for ensuring the disbursement of agriculture loan at a fast pace with a view to boosting production and to save people from the ongoing and post COVID-19 challenges.
Bankers said, the loan disbursement process in the agriculture sector severely disrupted in the last few months because the schedule banks offered limited services especially in the rural areas, and for this, many farmers in the Upazila and Union Parishad level were failed to submit their loan proposals.
Banking sources said, the Prime Minister Sheikh Hasina announced to provide necessary assistance to increase the agriculture production. The premier declared stimulus loan package worth Tk 5,000 crore to facilitate the sector as part of the preventive measure from COVID-19 pandemic.
As per the plan, the government will provide interest subsidy for the next one year for increasing the distribution of low interest loans in the agricultural sector. Farmers will get loans at 4 percent interest from April 1. In addition, at least 60 percent of the agricultural sector loans should be given to the grain sector. As per the direction of the Prime Minister, the farmers did not get adequate financial assistance from the banks, indicating that the banks are deliberately violating the state order.
Dr Mustafizur Rahman, Distinguished Fellow of Centre for Policy Dialogue (CPD) expressed his dissatisfaction for poor disbursement of the stimulus loan packages.
As the lending rate is low, the private banks are intentionally wasting time to distribute loan among the affected farmers.
“It is true that the private banks are holding limited branches in rural areas which are also a reason for slower agriculture loan. I recommended the private banks to make a liaison with the micro-finance institutions to distribute their targeted loan amount”, Rahman added.
Currently, the prices of essential commodities have increased significantly, causing immense public sufferings, he mentioned. “If agriculture production may not gain bumper production this year, people will face more difficulties to manage their minimum requirement of food items”, he also added.
He urged the central bank for undertaking effective steps to disburse stimulus loan immediately because stakeholders of all sectors are facing acute financial crisis for virus pandemic.