Farm Loan Disbursement By Pvt Banks
Farmers pay double the interest rate set by BB
Many farmers who take agriculture loan from the private commercial banks are paying almost double the interest rate set by the Bangladesh Bank, the central bank officials alleged.
BB data showed that private and foreign commercial banks had disbursed Tk 3,111.13 crore or 46.52 per cent of their total farm loans of Tk 6,687.60 crore through the microfinance institutions (MFIs) or NGOs in the FY2013-14.
As per BB’s farm loan policy, the banks are supposed to give loans to farmers at an interest rate of 13 per cent.
‘The MFIs charge more than 25 per cent interest on the loans they give to farmers after taking the fund from the private banks at a rate of 13 per cent. In the process, the basic concept of giving low interest loan to farmers is severely dented,’ said an official.
He said half the clients of private banks and most of the clients of state-run banks get farm loan at an interest rate of 13 per cent. ‘But it is not possible for all state-run banks to reach all areas in the country while many of the private banks are reluctant to expand their activities in rural areas,’ he said.
State-owned banks disbursed only Tk 240.29 crore or 2.57 per cent of their farm loan of Tk 9,349 crore through MFIs in FY14.
He said the private banks which give farm loans through MFIs should lower their interest as they did not have to spend any fund for supervisory and recovery related activities. While the MFIs should also lower the interest of farm loans as they get the fund with lower interest, he said.
The BB data should that a total of 113 MFIs participated in disbursing farm loans in the FY14, 107 in the FY13 and 92 NGOs in FY12.
Pubali Bank managing director Helal Ahmed Chowdhury told New Age on Monday that the PCBs and FCBs were forced to disburse the farm loans through MFIs as they did not have sufficient branches in the rural area.
He said that the interest rate of farm loan between 25 per cent and 27 per cent was high, considering the situation of the farmers.
He requested the banks to take measures to decrease the rate of interest through discussions with MFIs to speed up the country’s financial inclusion.
Former interim government finance adviser Mirza Azizul Islam said that such type of higher interest rate on farm loans would not bring any positive impact on the country’s agriculture sector.
He said that Microcredit Regulatory Authority should take initiative to decrease the rate of interest for farm loans.
-With New Age input
