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BB set to fix 9pc ceiling of interest against farm loan

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Badrul Ahsan :
The Bangladesh Bank (BB) is set to fix highest ceiling of interest against farm loan upto flat 9 per cent without any service charge and others, sources said.
Farmers are now forced to pay application processing and evaluation fee, including Tk 600 as stamp charge, to the banks while taking farm loans.
In this context, the Central Bank is likely to form a farm loan policy guideline 2017-18 for all the commercial and specialized banks operating in the country. An announcement in this respect will be made by the end of this month.
"We have already decided that the farmers will not pay any service charge while taking agriculture loans from the banks," a high official of BB told The New Nation preferring anonymity.
"The new policy will be declared any time within this month and will come into effect from this fiscal year, meaning that the farmers will count only nine per cent interest as flat," he added.
The Central Bank has set the farm loan disbursement target for banks at Tk 20,400 crore for FY 18, increasing by 16.23 per cent from Tk 17,550 crore for FY 17.
The banks already crossed their annual target of farm loan disbursement in 11 months (July-May) of FY 18 against the backdrop of a decreased credit demand from the industrial sector.
All the banks together distributed Tk 18,935.57 crore in farm loans in the July-May period of FY 2016-17, which was 107.89 per cent of their annual farm loan disbursement target.
The Central Bank has not prepared the achievement figure of FY 17 as it is yet to get the farm loan disbursement figure of June from the banks, the BB official said.
He, however, said that the amount of disbursed farm loan might cross Tk 20,000 crore in the just concluded fiscal year.
The Central Bank has also brought some major changes in previous farm loan policies as the banks will have to disburse at least 10 per cent loans of their annual farm loan target to the livestock sector from FY 18.
The BB will also allow the banks to disburse the term loan to promote the country's fisheries sector.
The new policy will also give a relaxation for the nine new banks disbursing five per cent farm loans on mandatory basis as they will be allowed to distribute 3.50 per cent agriculture loans of their outstanding credit from previous limit of five per cent.
Nine new banks had been pursuing the central bank for long to withdraw many of the conditions, including disbursement of five per cent farm loan out of their outstanding loans, under which they were given licences in 2012.
According to the BB policy, every bank has to disburse at least two per cent of their total lending in the agricultural sector.
The BB, however, may allow the nine banks to disburse two per cent farm loans of their total outstanding credit from FY19, the official said.

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