Farm loan release rises in March

Staff Correspondent | Published: 00:00, Apr 20,2019 | Updated: 22:32, Apr 19,2019

 
 

A file photo shows a farmer inspecting a paddy field on the outskirts of Dhaka. Disbursement of farm loans by the scheduled banks increased by 6.85 per cent or Tk 137.91 crore in March compared with that in the previous month due to the banks’ move to achieve their annual targets. — New Age photo

Disbursement of farm loans by the scheduled banks increased by 6.85 per cent or Tk 137.91 crore in March this fiscal year (2018-19) compared with that in the previous month due to the banks’ move to achieve their annual targets.
According to BB data, farm loan disbursement by the banks rose to Tk 2,150.43 crore in March from Tk 2,012.52 crore in February.
Bank officials said although the banks were suffering from liquidity crisis, farm loan release by the banks increased in March due mainly to complying with the regulatory obligation.
The banks have to achieve the BB-set targets regarding farm loan disbursement.
If they fail, the banks are supposed to keep aside the undisbursed farm loan amounts and they are not allowed to use the funds for other purposes, officials said.
The banks disbursed Tk 16,263.99 crore in loans to the farmers in the July-March period of FY19, up Tk 49.73 crore on the same period of last fiscal year.
In the nine months, the banks managed to achieve 74.61 per cent of their overall annual farm loan disbursement target (Tk 21,800 crore).
The entities will have to disburse Tk 5,536.01 crore more to the farmers in April-June of FY19 to achieve the target.
Officials of the central bank said that though the farm loan disbursement by the banks was slow during the first eight months of FY19, the entities were expediting disbursement in the remaining months to fulfil the target.
In FY18, when the banks had adequate liquidity, they had disbursed Tk 21,393.55 crore in farm loans against the Tk 20,400-crore target.
In July-February of FY19, farm loan disbursement was 2.81 per cent or Tk 406.86 crore lower than the amount in the same period of FY18 due mainly to liquidity crisis in the country’s banking sector.
Considering the slow growth in loan disbursement, the central bank in December, 2018, extended policy support by allowing the banks to reschedule short-term farm loans even without any down payment.
The policy relaxation was aimed at facilitating famers, who received rescheduling facility under the policy relaxation in 2015, but again became incapable of repaying loan instalments on different grounds including natural disaster.
As per the central bank’s latest report, outstanding farm loans stood at Tk 40,922.85 crore as on March 31 this year while the figure was Tk 40,601.11 crore at the end of FY18.

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