Dhaka, Bangladesh (BBN) - The central bank of Bangladesh has introduced a 'Revolving crop credit limit system' for a three-year term to gear up disbursement of the farm loan across the country.
Under the new system, the farmers will be relieved from applying afresh every time they need loans during the period.
The system will facilitate the loan account of a farmer automatically renewed and the farmers would be entitled to a fresh crop loan without submitting any new application, officials said.
The Bangladesh Bank (BB), the country’s central bank, has also made mandatory for all local and foreign commercial banks to disburse agriculture credit from this fiscal to ensure food security of the country.
The central bank issued two separate circulars on Monday in this connection and asked the banks to follow the new instructions properly to facilitate farmers across the country.
“The central bank took the move to ensure contribution of all banks on the country's overall production,” a BB senior official told BBN in Dhaka.
He also said the BB asked the banks, which have not yet fixed their agro-credit target, to immediately fix the target and inform the central bank.
The central bank earlier set an agriculture credit target of nearly BDT 94 billion for the current fiscal year, which is 13 per cent more than the last fiscal year, considering the need for increasing food production through increasing investment in the sector.
The BB also asked the banks to follow 'area approach' aiming to increase the flow of agro-credit based on the production of crops.
The banks, having not enough branches in the rural areas, will be allowed using non-governmental organizations (NGOs) linkage for disbursement of the farm credit.
"But the banks must ensure whether or not the disbursed loans are being used in the agriculture sector," the circular said.
BBN/SI/SS/AD-30September08-8:10 PM (BST)