Banks focus on agri sector amid low demand from industrialists
Farm loan disbursement posted a 24.82-per cent growth in the first quarter (July-September) of the current fiscal year from that in the same quarter of the FY 2012-13 due to a decreased credit demand from the industrial sector. The Bangladesh Bank data released on Monday showed that farm loan disbursement by the scheduled banks increased to Tk 2,861.58 crore in July-September of the FY14 from that of Tk 2,292.52 crore in the corresponding period of the FY13.
BB officials told New Age on Monday that the figure increased as the majority of the banks disbursed significant amount of loans in the agriculture sector due to a decreased loan demand from the industrial sector amid political unrest.
They said the country’s businesspeople had recently adopted a ‘wait and see’ approach to expansion of their investment due to the ongoing political violence that pushed up the banks’ farm loan disbursement in the last few months.
The BB has recently asked managing directors and chief executive officers of all banks at a bankers’ meeting at the central bank’s headquarters to disburse more loans in the agriculture sector to spur the credit growth in the private sector, they said.
The central bank gave the directive as the credit growth in the private sector continuously declined since the beginning of the FY13.
The banks collectively disbursed 19.61 per cent of their annual farm loan target in the first three months of this fiscal year, whereas 16.22 per cent of the target was disbursed during the same period of the FY13.
In the first three months of the FY14, the state-owned commercial banks — Sonali, Janata, Agrani and Rupali — and the two specialised banks — Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank — together disbursed Tk 1,699.43 crore in farm loans, which is 19.33 per cent of their annual loan disbursement target of Tk 8,790 crore.
The private and foreign commercial banks together disbursed Tk 1,162.15 crore in agricultural loans in July-September, which is 20.02 per cent of their total annual loan disbursement target of Tk 5,805 crore.
A BB official told New Age that the majority of the banks were now enjoying surplus liquidity due to a lower credit demand from the businesspeople and cautious policy taken by the banks in sanctioning fresh loan to the industrial sector.
The BB data showed that the credit growth in the private sector declined to 11.33 per cent in August in the FY14 compared with that of 19.92 per cent in the corresponding month of the FY13.
The official said the growth dropped due mainly to the political violence ahead of the general elections.
Under the circumstances, the banks are now investing significant amount of fund in the government securities with a lower interest rate of 8-12.16 per cent, he said.
The banks have also been encouraged to disburse farm loan with an interest rate of 13 per cent in a bid to mobilise their idle fund, he said.
Besides, the banks have also taken a cautious policy in giving fresh industrial loan after a number of scams in the banking sector were unearthed, he said.
Due to the scams, the defaulted loans in the industrial sector rose by 79.05 per cent in the FY13 compared with that of the FY12 when it decreased by 0.90 per cent, the BB data showed.
The defaulted industrial loans stood at Tk 15,553.05 crore in the FY13 against Tk 8,686.50 crore in the FY12.
So, the banks have turned their attention to the farm loan disbursement, the official added.
-With New Age input
