The instruction came at a meeting with senior officials of the banks at BB headquarters in the capital on Monday
Bangladesh Bank (BB) has instructed all private commercial banks and foreign banks for taking effective measures to achieve their agro-credit disbursement targets by the end of this fiscal.
The instruction came at a meeting with senior officials of the banks at BB headquarters in the capital on Monday.
BB Agricultural Credit Department General Manager Md Habibur Rahman chaired the meeting.
The banks, whose disbursement performance was below 50%, made a commitment to achieving their targets by the end of fiscal year, according to a meeting source.
“We will closely review the banks’ performance to help them achieve their targets by the end of FY 20,” said a BB official.
He said the central bank would take action against the banks if they failed to achieve their farm-loan disbursement targets by the timeframe.
The BB's latest moves came against the slow trend in farm credit disbursement in recent months.
During July to January period of this fiscal year, private commercial and foreign banks disbursed Tk6,850.56crore to the farm sector, which is 49.83% of its fiscal target.
However, eight state-run banks disbursed Tk6,253.71 crore or 60.28% of its fiscal target, according to the central bank data.
The Bangladesh Bank set the farm credit disbursement target for the current fiscal year at Tk24,124 crore or 10.66% up from previous fiscal year.
Loan disbursement to the sector rose by Tk1,003.23 crore, up from Tk12,101.04 crore in the same period of 2018-19 fiscal year, according to the Bangladesh Bank data.
The disbursed volume amounted to 54.32% of the target set for the 2019-20 fiscal year.
An increased flow of agricultural loans could give a major boost to the overall economic development of the country, says a study by the Bangladesh Institute of Bank Management (BIBM).
As agriculture is a labour-intensive sector, its increased accessibility to long-term finance can make substantial contribution to the gross domestic product (GDP) of the country, it observes.
If banks and other non-banking financial institutions invest more in the agriculture sector, more people could be employed. This will help reduce the poverty rate and develop the rural economy, says the study.