The Bangladesh Bank governor has urged the commercial banks to speed up disbursing agricultural loans to overcome the ongoing economic crisis and possible threats of food shortage in the country.
Bangladesh Bank Governor Abdur Rouf Talukder gave instructions to the scheduled banks' managing directors in this regard in a meeting Tuesday to fully implement the government's agricultural policy.
The central bank governor has also asked the commercial banks to reduce investment in defaulted industrial loans.
Bangladesh Bank officials present at the meeting said the managing directors of the banks were reminded of the emphasis on agriculture given by the prime minister to reduce the import dependency for food.
The central bank also urged the commercial banks to focus more on agriculture than the general loans.
The Bangladesh Bank governor praised the scheduled banks which are leading in the field of agricultural loans and gave a stern warning to the banks which are indifferent towards it, said sources.
In the first four months (July-October) of the current fiscal year, Tk9,469 crore was disbursed as loans in the agricultural sector, which is 19.78% more than the same period of the previous fiscal year.
During the same period in FY22, Tk7,905 crore was disbursed in the sector.
There is a target to disburse Tk30,911 crore as agricultural loans in the current fiscal year and 30.63% of the amount was disbursed in the first four months.
The central bank announced several similar schemes for farmers even during the Covid-19 situation when food imports from the global market were disrupted.
In the first phase, Tk4,295 crore in loans was disbursed from a refinancing scheme of Tk5,000 crore, while in the second phase, Tk3,050 crore was disbursed as of September this year under another refinancing scheme.
Recently, the Bangladesh Bank has created a Tk5,000 crore refinance scheme for farmers, aiming to ensure food security by boosting domestic production amid the worsening global food crisis.
Under the scheme, farmers will get loans for cultivating paddy, fish and vegetables at an interest rate of 4%, which they can repay in 18 months including a three-month grace period, according to a central bank notice issued recently.
After Tuesday's meeting, Association of Bankers Bangladesh Chairman Selim RF Hussain said, "Special emphasis has been given on speeding up agricultural loans, because all the agencies including the World Bank and the International Monetary Fund (IMF) have recommended focusing on it."
"The amount of loss in marginal loans is also very low, so it is relatively risk free. There is usually no default in this loan. Usually the big borrowers are defaulters," said Selim RF Hussain, managing director of Brac Bank.
He said Brac Bank has always put special emphasis on agricultural loans and considering the ongoing situation, they will take special initiatives in this regard as per the Bangladesh Bank's instructions.
According to government data, Bangladesh ranks third in rice production in vegetable production, seventh in mango production, seventh in potato production and eighth in guava production in the world.
Agricultural loans are given at 4-8% interest rate.