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Farmers were charged on average 19 per cent interest against 35.14 per cent of the farm loans disseminated by banks through microfinance institutions or non-governmental organisations in last fiscal year (2018-19) in line with the Bangladesh Bank policy.
Banks were allowed to charge highest 9 per cent interest against farm loans disbursed through their own channels.
The farmers received Tk 8,297 crore of the disbursed Tk 23,616.25 crore through MFIs, said Bangladesh Bank deputy governor SM Moniruzzaman while unveiling ‘Agricultural and Rural Credit Policy and Program for the fiscal year 2019-20’ at the BB headquarters in capital Dhaka on Tuesday.
In some cases, the farmers were even charged up to 26 per cent interest against farm loans.
BB executive director Ashok Kumar Dey and its general manager Md Habibur Rahman were present at the event, among others.
Under the new policy, the BB set Tk 24,124 crore as farm loan disbursement target for banks, raising the target by 10.66 per cent from Tk 21,800 crore set for FY19.
Banks will have to disburse 60 per cent of the loans in the crop sector, a minimum 10 per cent to the fisheries sector and 10 per cent to the livestock sector, according to the policy.
Speaking about the high interest rate, Moniruzzaman said that they were trying to bring down the rate of interest on farm loans to be disseminated through MFIs.
The rate was 10 percentage points higher compared with that on farm loans distributed by banks through their own channels, but the BB is allowing the rate due to the high cost of operation of the MFIs, said Moniruzzaman, adding that banks were instructed to use their branches, agent banking wings for channelling the loans instead of using MFIs.
The BB deputy governor said that the central bank had published the policy for achieving the prime objectives of sustainable development goals (SDGs) including eradication of poverty, ensuring safe and nutritious food and maintaining good health for the country’s people.
Asked whether there was any plan to waive the interest on loans and instalment collection from the farmers in the flood affected areas, he said that it would not be possible for the central bank to announce such policy but would consider proposals if given from the local administration and local representatives.
He, however, informed that there was no bar on banks from waiving loan interest.
Considering the increased demand for agricultural and rural credit, disbursement target for the state-owned and specialised commercial banks was set at Tk 10,375 crore and for the private and foreign commercial banks at Tk 13,749 crore, according to the agricultural credit policy.
CIB report must for all outstanding crop loans, but the report is not essential for new allocation or renewal of loans up to Tk 2,50,000, Moniruzzaman informed.
(NA)
