Govt orders Krishi Bank to stop giving loans for non-agricultural purposes

The government has ordered Bangladesh Krishi Bank (BKB) not to disburse loans for non-agricultural purpose, as those taking it have not paid them back.

Shaikh Abdullahbdnews24.com
Published : 30 May 2015, 08:08 AM
Updated : 30 May 2015, 12:29 PM

The finance ministry has sent a letter to the bank recently to only give loans for agricultural purposes and refrain from giving loans for foreign trade.
 
BKB Managing Director MA Yusuf said the bank has taken initiatives to collect the unpaid loans given for non-agricultural purposes.
 
According to the Bangladesh Bank, 16 branches of BKB gave Tk 19.26 billion loans for commercial purposes between 2010 and 2013.
 
All these loans are yet to be repaid.
 
The central bank also found that BKB gave loans against fake Letters of Credit (LC).
 
The Krishi Bank has long been in loss due to several reasons, including waiving off interest.
 
The bank started to give loans for commercial purposes from 2010 to make up for losses.
 

Now that it has run out of reserves due to commercial loans, it is not able to give loans for agricultural purposes. That defeats the very purpose why it was set up.
Finance Minister AMA Muhith has expressed disappointment over the situation.
Managing Director Yusuf agrees with Muhith.
"It was a wrong decision to give loans for commercial purposes," he said. "Krishi Bank was wrong to go beyond its main activity."
He also said Tk 5 billion of the unpaid loans given out for commercial purposes has so far been collected.
The total loss suffered by the bank stands at Tk 61.31 billion now. 
It asked for Tk 64.43 billion from the government as capital in December last year.