Bangladesh Bank wants all banks to meet agriculture financing targets

Bangladesh Bank has given a firm push to ensure private banks including foreign banks met agriculture financing targets.

Staff Correspondentbdnews24.com
Published : 21 July 2015, 04:31 AM
Updated : 21 July 2015, 05:36 AM

These banks have been told to deposit the undisbursed funds meant for agriculture financing with Bangladesh Bank. 

No interest will be paid on these funds and they will remain blocked.

So, if a bank has a target of disbursing Tk 100 in loans to agricultural sector in a financial year and ends up disbursing Tk 80, it will have to deposit Tk 20 with Bangladesh Bank and expect no interest on it. 

Previously , the banks would have to keep only 3 percent of the undisbursed target for agricultural loans with the Bangladesh Bank. 

So, if a bank had set a target of Tk 100 for agriculture loans and disbursed only Tk 80, it could get away by depositing only 60 paise with Bangladesh Bank.

And those banks that disbursed 2.5 percent of their total loans to the agriculture sector were spared.

That will not be the case anymore. 

The Bangladesh Bank will now block the entire undisbursed amount without interest. 

The new regulations, to be enforced by Bangladesh Bank in 2015-16 , have been communicated to the chief executives of all private banks including foreign banks.

But the target for agriculture finance for 2015-16 has not yet been finalised.

In 2014-15, the agriculture financing target for banks was finalised at Tk 155.5 billion -- Tk 64.10 billion for private banks including foreign banks and Tk 91.40 billion for state-owned banks and scheduled banks. 

Latest Bangladesh Bank statistics indicate that the banks could achieve only 72 percent of their agriculture finance targets in 2014-15 by disbursing various kinds of farm loans worth Tk 102.02 billion.