Bangladesh Bank is going to toughen its policy on farm loan disbursement as the central bank will ask the scheduled banks to deposit the entire fund of their undisbursed agriculture loans in a blocked account with the BB.
Currently, the BB keeps three per cent of the undisbursed farm loans as punishment because the banks get no interest on the amount. They will not get any interest this time either, BB officials said.
BB executive director Subhankar Saha told New Age on Sunday that the central bank would implement the rule from this financial year 2015-16.
He said the central bank would return the fund to the respective banks if they distribute the undisbursed amount with their fresh targets for the next financial year.
The central bank will issue a circular in the shortest possible time in this regard, he said.
Another BB official said the central bank would keep the fund (undisbursed farm loans) in the block account as it would not invest the amount.
He said some banks had frequently failed to fulfil their annual targets of the farm loan disbursement.
The central bank earlier took punitive measures against some banks but their nature did not change much, he said.
Against the backdrop, the BB is going to issue the circular so that they will take initiatives to fulfil their annual farm loan disbursement targets.
The BB official said some banks did also not take proper moves to disburse their targeted farm loans in the just concluded financial year and consequently the agriculture loan disbursement dropped in the recent months.
According to the latest BB data, farm loan disbursement registered a 3-per cent fall in the first 11 months of the FY 2014-15 compared with that of the same period in the FY14.
Farm loan disbursement by all scheduled banks dropped to Tk 13,695.97 crore in the July-May period of the FY15 from that of Tk 14,120.89 crore in the same period of the FY14.
Banks should have disbursed farm loans at least 92 per cent of their annual target in the first 11 months of the FY15 to achieve their fiscal programmes but they distributed 88.08 per cent of the agriculture loans in the period.
The central bank set a farm loan disbursement target of Tk 15,550 crore for the FY15.
The BB data showed nine banks showed lower performance in disbursing farm loans as they distributed below 70 per cent of their targets between July and May of the last financial year.
The nine banks are Rupali Bank, National Bank of Pakistan, Jamuna Bank, National Bank, NRB Commercial Bank, Prime Bank, South Bangla Agriculture and Commerce Bank, Southeast Bank, and Premier Bank.
The BB official said the central bank had already warned the banks that it would take punitive measures against them if they (banks) failed to achieve their targets at the end of the FY15.
Currently, the BB keeps three per cent of the undisbursed farm loans as punishment because the banks get no interest on the amount. They will not get any interest this time either, BB officials said.
BB executive director Subhankar Saha told New Age on Sunday that the central bank would implement the rule from this financial year 2015-16.
He said the central bank would return the fund to the respective banks if they distribute the undisbursed amount with their fresh targets for the next financial year.
The central bank will issue a circular in the shortest possible time in this regard, he said.
Another BB official said the central bank would keep the fund (undisbursed farm loans) in the block account as it would not invest the amount.
He said some banks had frequently failed to fulfil their annual targets of the farm loan disbursement.
The central bank earlier took punitive measures against some banks but their nature did not change much, he said.
Against the backdrop, the BB is going to issue the circular so that they will take initiatives to fulfil their annual farm loan disbursement targets.
The BB official said some banks did also not take proper moves to disburse their targeted farm loans in the just concluded financial year and consequently the agriculture loan disbursement dropped in the recent months.
According to the latest BB data, farm loan disbursement registered a 3-per cent fall in the first 11 months of the FY 2014-15 compared with that of the same period in the FY14.
Farm loan disbursement by all scheduled banks dropped to Tk 13,695.97 crore in the July-May period of the FY15 from that of Tk 14,120.89 crore in the same period of the FY14.
Banks should have disbursed farm loans at least 92 per cent of their annual target in the first 11 months of the FY15 to achieve their fiscal programmes but they distributed 88.08 per cent of the agriculture loans in the period.
The central bank set a farm loan disbursement target of Tk 15,550 crore for the FY15.
The BB data showed nine banks showed lower performance in disbursing farm loans as they distributed below 70 per cent of their targets between July and May of the last financial year.
The nine banks are Rupali Bank, National Bank of Pakistan, Jamuna Bank, National Bank, NRB Commercial Bank, Prime Bank, South Bangla Agriculture and Commerce Bank, Southeast Bank, and Premier Bank.
The BB official said the central bank had already warned the banks that it would take punitive measures against them if they (banks) failed to achieve their targets at the end of the FY15.
Source: New Age
