Banks get green light to disburse agri loans for rooftop gardening

Bangladesh Bank (BB) on Sunday announced a new agricultural and rural credit disbursement policy with the target of disbursing Tk 35,000 crore in FY2023-24, which is 13.60 per cent higher than the FY2022-23 target, to ensure food security in the country.

The central bank has made the move considering the increased demand for agriculture and rural loans in the country.

The Agricultural and Rural Credit Policy and Program for FY24 was announced at a press conference at BB headquarters at Motijheel in Dhaka on Sunday.

The central bank’s Deputy Governor AKM Sajedur Rahman Khan, Agriculture Credit Department (ACD) Director Kaniz Fatema, other senior BB officials and representatives of banks and stakeholders were present.

Under the new policy, banks will now be able to disburse agricultural loans for rooftop gardening, which could create a new scope for urban farming and help reduce the temperature in the city areas.

Considering the demand for agricultural and rural loans, state-owned commercial and specialised banks have been given a disbursing target of Tk 12,030 crore, private commercial banks Tk 21,923 crore, and foreign banks’ branches in Bangladesh Tk 1,047 crore in agricultural loans in FY24.

The central bank has also asked eight banks to return Tk 2,690.94 crore for failing to meet the target set for agricultural loan distribution in FY23. This fund will be redistributed to the farmers through the banks that have been successful in disbursing such loans.

Deputy Governor Sajedur said, “Agriculture is our life force and every year the target of credit disbursement in this sector is being increased to boost production.”

From next year, banks will be able to give loans to farmers against their land as well as leased land for rearing animals. The banks will even invest in rooftop agriculture, he added.

He added, “The banks that will fail to disburse these loans will deposit them in the Bangladesh Agriculture Common Fund (BACF). These funds will be redistributed to the farmers through 100 per cent successful banks.”

Several top bankers who were present at the press conference also emphasised increasing the disbursement of farm loans through banks.

Sonali Bank Managing Director (MD) Afzal Karim said there is no alternative to increasing credit disbursement through banking channels to develop the agricultural sector. Because farmers get loans from several NGOs and their interest rates are three times higher, which affects marginal farmers.

City Bank MD Mashroor Arefin said they failed to distribute agricultural loans as per the target in FY23. “But we plan to make a rebound and disburse more agricultural credit than the target given by BB in the current FY.”

According to the new policy, in FY23, all the scheduled commercial banks disbursed Tk 32,829 crore in agriculture and rural loans, which was approximately 6.55 per cent higher than the target.

In the same fiscal year, these loans credits were disbursed among 36,18,545 people, where 18,81,933 women borrowers received Tk 22,402 crore and 27,36,087 small and marginal farmers received around Tk 22,402 crore from different banks.

Moreover, Tk 19.09 crore was disbursed among 3,449 farmers of char, haor and less developed areas of the country.

BB officials said that there are some new inclusions in the agricultural credit policy to ensure food security and develop a sustainable agricultural credit system in the context of the present global economic situation.

Apart from the target of commercial banks, Bangladesh Sambay Bank Limited and Bangladesh Rural Development Board have been given a disbursing target of Tk 26 crore and Tk 1,423 crore, respectively, as agricultural and rural credit.

Banks will use their networks (branches, sub-branches, agent banking, contract farming and syndicated loan disbursements) and bank-MFI linkages to achieve credit disbursement targets.

In this case, the amount of loans distributed through the banks’ network should be at least 50 per cent of the target. Earlier, it was 30 per cent.

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