Deadline extended for disbursing stimulus money for farm sector
Bangladesh Bank yesterday extended the deadline to disburse the Tk 5,000-crore stimulus package for entrepreneurs found in the farm sector by 90 days following lacklustre lending.
When the package was announced in April, banks were asked to disburse the fund by September 30. But they have shown a poor effectiveness, prompting the central bank to increase the timeframe.
Now, lenders must fulfil their target simply by December 31, regarding to a central bank find issued yesterday.
Forty-three banks have up to now signed participation agreements with the central bank to disburse loans from the refinance scheme dedicated to reviving the agriculture sector.
Of these, 17 banks disbursed loans below Tk 1 crore, an unwelcome production as the federal government looks to prompt quick recovery from the financial fallout of Covid-19.
The banks gave out a total of Tk 1,114.16 crore as of August, which is 22.28 % of the package, data from the central bank showed. A complete of 46,815 clients have so far received the fund to make their businesses vibrant.
The most recent flood and the slow recovery have discouraged businesses to take out loans, a central banker said. Besides, banks are yet to take proper initiatives to accelerate disbursements.
Bangladesh Bank has repeatedly asked the country's lenders to expedite disbursements nevertheless they didn't pay any heed.
"Close monitoring by senior officials of banks would be needed to speed up the disbursement," said Md Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank, which disbursed the best quantity among all lenders.
Krishi Bank disbursed Tk 800 crore out of the Tk 1,190 crore target by September.
Banks can disburse large loans among a small number of borrowers to achieve the target but it can't do the same in case of farm loan, said Tariqul Islam Chowdhury, managing director of South Bangla Agriculture and Commerce Bank.
"We are giving loans to farm borrowers. Some borrowers are taking loans in the range of Tk 2 lakh to Tk 5 lakh. So, it could take a big number of borrowers to attain the target.
"Every single proposal has to be approved by the board, so that it does take time," he said.
Chowdhury said bankers were reluctant during the past to disburse farm loans as a result of lower interest levels. Now, all loans carry the equal 9 % interest rate following the central bank capped the lending rate on April 1.
SBAC has been given a farm loan disbursement target of Tk 11 crore.
The tenure for the loans is 1 . 5 years, including a grace amount of half a year at both banks and clients' ends. Banks will borrow from the refinancing scheme at 1 % interest and lend at 4 %.
