Abu Sazzad: The major portion of the farmers is being forced in receiving the financial assistance from the non-government organizations (NGOs) at higher interest rate, posing severe threat on their survival existence.
The marginal farmers are facing severe hardship to repay the loan installment due to higher lending rate of NGOs and price disparity, squeezing their financial capability gradually.
Actually, the loan recovery team of NGOs is highly active in their respective surroundings; as a result, farmers are always carrying an extra visible pressure to repay their loan installment or the equal monthly installment (EMI) amount.
Despite having the opportunity to reach the farmers loan directly, banks are disbursing agricultural loans through NGOs. The farmers’ loan has increased by many folds in the recent years and they are availing loans, but they are counting higher rate which is affecting to attain expected level of profit for marginal farmers. Industry insiders said, at present, the agent banking outlets are rapidly spreading at the union level through which banks can distribute the loans among the affected farmers. Apart from this, the expansion of the mobile banking can also provide the same facilities to the farmers which would help reducing the operational cost of the banks.
However, only 26 percent of farmers are getting direct loans from banks while 63 percent of farmers are availing loans from the NGOs. Still, NGOs are still charging more than 20 percent interest on farmers’ loan, but NGOs are borrowing money from banks at less than 9 percent interest.
Over the past few years, banks have opened branches at the village level only to highlight financial inclusion program, but the marginal farmers are receiving inadequate support from the financial institutions.
Although the Bangladesh Bank has given special importance to facilitate farmers and vulnerable groups, but banks are deliberately ignoring their responsibilities for ensuring hassle-free services which is also one of the major reasons to increase economic disparity in the country.
According to the flexible policy of Bangladesh Bank, now private commercial banks are distributing their famers’ loan target through various NGOs. Although, NGOs are contributing a leading role to distribute farmers loans, but most of NGOs are distributing money in different sectors in the name of agricultural loan for gaining their vested interests.
Currently, small and medium scale NGOs are distributing loans on health, education, disaster management, refugee relief, agriculture, livestock, fisheries, care of elderly people and integrated rural development programs, said the industry insiders.
Experts claimed that the NGOs authorities are gaining huge profit every year, but farmers are paying their repayment amount at a rate of 25 percent which is really unfortunate for a nation. The farmers are failing to attain benefits mainly lack of central banks control over NGOs and weak policies, they also opined.
BRAC Bank Chairman Dr Ahsan H Mansur said that it is possible to provide low interest loans for the farmers through distributing such financial assistance under agent and mobile banking services.
“It is true that farmers are paying higher rate through taking loans from NGOs, but NGOs are playing vital role to include the farmers into financial inclusion. NGOs should change their mindset to provide low rate lending for the farmers as well as to protect their existence”, he added.
He recommended the NGOs to upgrade the technology so that they would be able to reduce their operational cost and to ensure the low cost lending for the marginal farmers.
Meanwhile, many farmers expressed their dissatisfaction to the Daily Industry because they are not getting the financial assistance from banks. They are facing difficulties to avail bank loan for policy complexity. Finding no other alternatives, farmers are receiving money from the alternative sources especially the NGOs. “It is tough to fulfill loan documents, but they are proffering NGOs because of their hassle-free loan service”, said Md Wahidunnabi, a local farmer of Demra in Narayanganj.
Sources said, some 3.6 percent farmers are still being forced to take loans from moneylenders against 30 percent lending rate without getting loans from banks while 6 percent farmers are also taking loans from their relatives or other sources. According to the Bangladesh Bureau of Statistics (BBS) survey, 40 percent farmers are managing loans from the alternative resources mainly due to non disbursement of the bank loan.
However, experts have underscored the need for facilitating the farmers for ensuring adequate financial assistance to strengthen the rural economy as well as to tackle the challenges of the virus pandemic.
According to a Daily Industry report, the paddy farmers are forcing to shift their profession for incurring losses, posing severe threat on food security in the country. Another repot disclosed that industrial and service are going to face profound uncertainty for the second wave of virus pandemic in EU countries.
“Bangladesh need to higher agriculture production to cope up the challenges of the pandemic, and for this, we have to facilitate the farmers though proving financial assistance at a lower rate”, said an expert.
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