Commercial banks failed agri-loans as BB looks on18 February 2014
NEWS reports said despite having excess liquidity in their vaults, 18 commercial banks did not disburse any credit to farmers to grow four types of import-replacing crops such as pulses, oil seeds, spices and maize in the first seven months of the current fiscal year (2013-2014). Although the Bangladesh Bank (BB) has frequently asked all the scheduled banks to stimulate their credit programme for the crops, they did not respond much to the central bank's instruction. Rather, they were allegedly reluctant to disburse the loans due to lower rate of interest. However, the banks, refuting the allegations, said that the recent political unrest had put an adverse impact on their agriculture credit programme. Under the special loan programme to stimulate the farming of the four spice items to replace their import by home grown crops, the banks apathy can't be easily understood. The allegation appears significant at a time when the central bank has offered six percent subsidy for the loan which banks have been asked to disburse at four percent interest. Thus central bank arranged the 10 percent interest against the loan taking into view the need to achieve local self-sufficiency in them or at least to reduce dependence on their import to reduce the country's huge import bills on these items. Then why the banks are reluctant is a big question. The report has it that the central bank set a disbursement target of Tk 90.93 crore for the said four crops for all the scheduled banks but they disbursed only Tk 39.37 crore which is 43.31 percent of the annual target. Out of this disbursement, four state-owned commercial banks - Sonali, Janata, Agrani and Rupali, in addition to two specialised banks - Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank have disbursed Tk 32.14 crore or 43.19 percent of their annual target of Tk 74.44 crore of the loans for the crops. The private and foreign commercial banks disbursed only Tk 6.23 crore and Tk 1 crore of their targets of Tk 13.83 crore and Tk 2.67 crore respectively in the period under review. 18 banks did not disburse any loan defying the central bank's order and working against the government targets to improve productivity of the four spice items in the country. We share Bangladesh Bank's special attention for enhanced loan to farmers to raise the productivity of the crops. But the news came as a big shock as to why the commercial banks had defied its order and why it can't take actions against the non-compliant banks. It appears that Bangladesh Bank has no enforceable authority at all - be it to stop small or big banking scams or holding control over the board of directors of banks who rather facilitate the mischief on many occasions. This time it has failed to secure the disbursement of special agricultural loans to marginalized farmers on four priority crops. We are bewildered to see whether the central bank has lost its effectiveness to powerful political and business lobbies. So it is failing to take any disciplinary actions but in doing so it is doing harm to the nation.