BB approves Tk 500 cr fund for sharecroppers

Bangladesh Bank (BB) has approved a Tk 500 crore fund for the country’s cash-strapped sharecroppers.
The central bank’s board approved the fund at a meeting on Thursday, said a BB source.
The board also decided to disburse the fund through a leading non-government organization (NGO), having enough experiences in small lending in the country.
“The central bank will start the selection process of the NGO next week. The loan would be disbursed in 150 upazilas and the upazilas will be selected from across the country considering the situation and needs of the sharecroppers,” the source said.
The central bank, he said, has fixed the interest rate at 10 percent so that the marginal borrowers could afford the loan.
He said the loan would be given to the groups of sharecroppers instead of individuals and the selected NGO would form the groups.
“The groups would also be provided with necessary training on their professions and managing of loans so that they could perform better in farming and repayments of the loans as well. For the first time in the country’s banking sector’s regulator offered sharecroppers the soft loan facility,” he said.
At present, most of the sharecroppers could not borrow money from the conventional credit system mainly due to their inability to provide collateral against the borrowing loan. “In many cases, the sharecroppers borrow money from local lenders and have to pay high interests after harvesting of crops, keeping little return for them,” the BB official said.
He observed that the soft loan would give cheaper credit option to the sharecroppers ensuring supply of necessary fund to the farm sector. “It would also help to increase crop production in the country,” he added.
Another source said that the central bank has been reviewing the capacity of BRAC in managing the loan portfolio. “It is most likely that the country’s largest NGO would get the responsibility of disbursing the loan as it has experiences in working with unprivileged people with an efficient country- wide network”, he added.

Courtesy of BSS, Dhaka