Dhaka, Bangladesh (BBN) – Farm credit disbursement will be made compulsory for all local and foreign commercial banks from the current fiscal year to ensure food security of Bangladesh.
“The central bank will take necessary measures immediately in this connection,” Senior Deputy Governor of the Bangladesh Bank (BB), the country’s central bank, Nazrul Huda told reporters Tuesday after a meeting of the high-powered committee on agriculture credit.
The government earlier formed an 11-member committee to supervise and monitor disbursement of agricultural credit by the state-owned banks and financial institutions.
Mr. Huda has been made the convener of the committee while the General Manager of the Agricultural Credit and Special Programmes Department (ACSPD) of the central bank M Abdul Haque as member secretary of the committee.
“The recent experience has made it clear that there is no alternative to investment in agriculture sector to face the challenge of food security in the global price situation,” he said while explaining the need for enhanced agro-credit.
The deputy governor said the central bank would not impose the credit target of the banks concerned, but would take measures to ensure a rational target.
“We’ll impose a certain percentage of banks’ annual credit to be earmarked for agriculture unless the banks comply with the directive on their own,” Mr. Huda noted.
The central bank of Bangladesh earlier set an agriculture credit target of nearly BDT 94 billion for the current fiscal year, which is 13 percent more than the last fiscal year, considering the need for increasing food production through increasing investment in the sector.
“We will introduce a new mechanism of revolving crop credit limit for a three-year term to relieve farmers from applying afresh every time they need loans,” Mr. Huda disclosed.
He also said that the mechanism would 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.
“We will ask the commercial banks to provide agro-credit using the farmers’ ID card that has been issued by the Department Agriculture Extension (DAE) to avoid middlemen,” the deputy governor noted.
Mr. Huda also said that the central bank would also take steps to provide collateral-free agriculture loans to share-croppers and fishermen.
He also said that the District and Upazila Agriculture Credit Committees would be activated to supervise the supply of agriculture inputs like fertilizer and quality seeds to the farmers.