Bangladesh Bank on Monday set farm loan disbursement target for local and foreign banks at Tk 15,550 crore for financial year 2014-15 which is 6.54 per cent higher than that of the recently concluded FY14. The BB set the target in its agriculture and rural credit policy and programmes for the FY15 in which the central bank set simple rate of interest on farm loan instead of existing compound rate of interest in a bid to save the farmers from the burden of bank interest.
BB governor Atiur Rahman unveiled the policy at the central bank headquarters in the capital in presence of managing directors and chief executive officers of all scheduled banks.
According to the BB data, all banks collectively disbursed Tk 16,036.81 crore, or 109.88 per cent of the target amounting to Tk 14,595 crore, in farm loans in the FY14.
In its fresh farm loan policy, the BB set simple rate of interest on farm loan to save the farmers from the defaulting situation, said Atiur.
Under the simple rate of interest, the farmers will pay their interest of the bank loans at the end of loan tenure meaning that they will get relief from a huge amount of interest.
‘The farmers are now counting interest on quarterly basis. From the second quarter, they have to pay the interest on the principal amount including the quarterly interest’, a BB official told New Age on Monday.
The tenure of farm loan is maximum one year.
The banks usually set compound rate of interest for almost all types of credit products, but they will have to set the simple rate of interest for the farm loan from July, he said.
The official said that the new policy would help the farmers repay the bank loans as they would count lower rate of interest than the existing rate.
In the farm loan policy for the FY15, the central bank set a loan disbursement target of Tk 9,140 crore for the four state-owned commercial and two specialised banks — Sonali, Agrani, Janata, Rupali, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank — from Tk 8,790 in the FY14.
For the FY15, Tk 6,410 crore has been set as annual farm loan disbursement target for the local private and foreign commercial banks.
According to the BB policy, every bank has to disburse between 2 per cent and 2.50 per cent of their total lending in the agricultural sector.
The central bank will consider the banks’ performance of the farm loan disbursement to calculate their (banks) CAMELS rating from this financial year.
BB governor Atiur Rahman said the central bank would introduce credit guarantee scheme in the coming days for the farm and SME loans in a bid to save the farmers and the small entrepreneurs from risks.
He asked the banks to disburse loan to the marginal farmers by taking loan from the central bank revolving fund of Tk 200 crore.
BB deputy governor SK Sur Chowdhury said the central bank had asked the banks to lower the rate of interest on the farm loan from the existing 13 per cent.
The BB asked the banks to set the interest rate at 10 per cent plus as the banks were now enjoying surplus liquidity, he said.
The BB asked the banks to strengthen their monitoring system on the farm loan so that the loan would not divert into other sectors.
-With New Age input
