The New Nation - Internet Edition

Staff Reporter

Disbursement of agricultural credit by the banks is paradoxically very low when farmers are hungry for money for fresh cropping and when huge money is lying idle with the banks.

Time and again directives of the Bangladesh Bank (BB), in this regard, is also not heeded. BB, which set a target for the banks to disburse Tk 8,192 crore farm loan for post-flood recovery, recently renewed its directive to increase farm loan and ensure easy access to money for the cyclone hit farmers of the south-western districts.

BB asked the banks to relax the condition of down payments in loan rescheduling and to disburse fresh loans as soon as possible.

However, knowledgeable sources are not optimistic about any satisfactory result with it as the banks so far have disbursed only Tk 1,306 crore 17 per cent of the target -in the first four months (July-October) of the ongoing fiscal year.

Chasing a target of Tk 625 crore Sonali Bank achieved 13 per cent. Janata Bank chasing Tk 525 crore achieved 15 per cent, Agrani Bank accomplished seven per cent of its Tk 480 crore target, Krishi Bank attained 19 per cent of its Tk 3,800 crore target and Rajshahi Krishi Unnayan Bank could disburse 24 per cent of its Tk 800 crore target.

On the other hand, according to the BB statistics, excess liquidity with all scheduled banks stood at Tk 142.84 billion by the end July 2007 against Tk142.79 billion at the end of June 2007.

Private commercial banks of the country are not used to give agro-credit, for they have no branches in the rural area. So, only public banks and NGOs are the sources of credit for the rural poor.

Explaining the reason behind low disbursement of agricultural credit, renowned banker Khondokar Ibrahim Khaled said, "Managements of public banks are not interested to release farm loans, for they have earlier found that its recovery rate is not satisfactory."

"The blame goes to the management when the loan turns into bad. Government does not want to subsidise for the bad loan. So bank managements are not interested in massive disbursement," he said.

The former deputy governor of the central bank suggested the government to take 50 per cent liability for the disbursed amount. Otherwise, only pressure will not be effective, he said.

The central bank recently warned of punitive action against commercial banks if it finds negligence in their duty to provide agricultural loans to farmers.

Khondkar Khalid said, "I think loan is not the immediate need of the people, who have been battered by cyclone. They need grant. Disbursement of crop loan will be important after two or three months.

Cyclone damaged standing crops on around 0.5 million hectares of land in the south and south-western districts, causing rice crop loss of around 0.6 million tones, particularly the aman paddy, according to the initial assessment by the Government.