Agricultural production is one of the key driving-forces of Bangladesh’s economy. Agriculture contributes almost 19% of total GDP of Bangladesh. Therefore GDP growth of the country mostly depends on the Agricultural production. We have fertile land and large population. So it is high time to give more emphasize to strengthen our national economy with a view to ensure food security through increase in agricultural production as well as by reviving the rural economy through vast expansion of employment generating activities. Present Government has given maximum importance on increased production of food grain by keeping agriculture as a priority sector. Due to the implementation of the agriculture-friendly policy by the Government, Bangladesh, today, becomes almost self-sufficient in food production.
In order to sustain this trend and in line with the pro-poor agricultural policy of the Government, the Agricultural and Rural Credit Policy and Program for the Fiscal Year 2013-2014 has been formulated. In addition to adopting the main features of the last year’s (FY 2012-2013) Agricultural and Rural Credit Policy and Program, certain new features (stated below) has been included in the new policy (for 2013-2014).
Agri. and rural credit target for the FY 2013-2014 :
For the FY 2013-2014, an amount of Taka 14,595.00 crore has been set as total target for disbursement of agricultural and rural credit by nationalized commercial & specialized banks, private and foreign banks. The target has been increased by about 3.29% compared to the target of FY 2012-2013. The target remains almost unchanged as 2012-2013 for Nationalized and Specialized Commercial Banks. And for Private and Foreign Commercial Banks, the target amount is determined as 2% (instead of 2.5% as mentioned in existing policy under special consideration for lack of capacity and sufficient branches of banks as previous FY) of their net Loans and Advances as on 31st March 2013. Apart from the aforesaid target determined for the banks, 6 newly established banks will disburse at least 5% of their net loans and advances according to the conditions of their banking licenses. At the same time, BRDB will disburse an amount of TK 670.50 crore of agriculture and rural credit with their own finance.
Target and achievement of previous FY 2012-2013:
In FY 2012-2013, a total of TK 14,667.49 crore of Agricultural and rural credit has been disbursed by 4 Nationalized, 3 specialized, 29 private and 9 foreign banks which is 103.80% against their target. This disbursed amount is increased by Tk 1535.34 crore (11.69%) compared to that of FY 2012-2013. Moreover, Brac, under BB’s special refinance programme for sharecropper, has disbursed (from July 2012 to June 2013) towards sharecropper an amount of TK 449.68 crore and BRDB also disbursed an amount of TK 595.19 crore of agri and rural credit in the FY 2011-2012.
Implementation of some important initiatives in 2012-2013:
Under annual agri. & rural credit policy and programme, 446,516 sharecroppers got appox. TK. 1106.06 crore of agricultural credit, which is 7.55% of total disbursed amount;
An amount of TK. 9302.10 crore of agri. credit has been disbursed towards 24,40,943 small and marginal farmers, which is 63.51% of total disbursed amount;
Around 4.45 lac women farmers got TK 1245.09 crore of agri. and rural credit from banks, which is 8.5% of total disbursed amount;
TK 1.41 crore of agri. credit has been provided towards 70 successful farmers;
Taka 74.90 crore agri. credit has been disbursed towards certain import-alternative crops such as- pulse, oilseed, spices and maize at 4% concessional rate;
More than TK 60.70 crore was disbursed only at 5% interest rate among 21,904 tribal farmers in the 3 Hill Tracts Districts through BKB;
Transaction of about TK. 294.12, 105.63, 47.81 and 19.49 crore has been occurred as credit disbursement, savings, inward and outward remittance respectively through more than 96.74 lac farmer’s account (10/- taka account);
Taka 2.39, 29.89 and 11.00 crore has been disbursed to Solar energy driven irrigation pumps, integrated cow rearing & bio-gas plant and solar home system respectively;
Under the special refinance scheme of Tk. 500 crore, an amount of TK 449.69 crore agri. credit has been provided through Brac towards 2.64 lac sharecroppers (in 250 upazillas of 48 districts) which are out of reach of any institutional credit.
Important features of Agricultural & Rural Credit Policy and Program for the FY 2013-2014:
Retaining the basic features of Agriculture & rural policy and program of previous FY, some new features have been included in this policy. Some notable features are-
‘Vermi-compost’ has been included in this policy as a new sector. A credit norm is also included. Besides this, Vermi-compost and Bio-fertilizer have been approved as a new sector of BB’s refinance scheme of TK 200 crore for renewable energy;
Burmese grape (‘lotkon’), Lemon, Hog-plum, Sapota, Malta have been included in this policy as new crops, the credit norms of this fruits are also included;
The credit norms of oil palm has been determined in this policy which was absent in the previous fiscal year;
The policy about ‘contract farming’ has been clarified and made more farmer-friendly;
The credit limit of all crops has been increased;
The credit limit and interest rate of the sectors included in Refinance scheme of renewable energy (solar panel, Bio-gas, integrated Bio-gas plant, Bio-fertilizer) has been revised to make more investment-friendly.
Other important features of the policy are-
According to the Agricultural & Rural credit policy and program, priority has to be given in 3 core sector viz. crop, fisheries and animal resources over other sectors;
Comparatively less developed and neglected areas (like char, haor etc.) shall be given priority for disbursing agricultural credit;
Credit shall be disbursed following area approach method considering the comparative advantages of producing crops in different regions;
In order to encourage normal banking transaction (like credit disbursement, savings, remittance etc.) through farmer’s account (taka 10/- account) in different banks as a part of financial inclusion, the deduction of levy up to taka 1 lac of debit/credit balance of these accounts has been withheld; A circular letter, dated 6/11/2012 concerning usage of these farmer’s account has been issued. BB will continue to monitor (offsite) on the utilization progress of these accounts quarterly basis;
Banks should have to give more emphasize for disbursement of agricultural and rural credit openly to ensure more transparency;
To ensure balanced participation of nationalized/specialized and private banks in disbursement of credit towards production of pulse, oilseed, spices and maize, the concessional interest rate has been increased to 4% from 2011. In order to enable the banks to get the interest loss subsidy promptly, the process has been simplified;
Any borrower, if not defaulter in any case, will be eligible to get the credit of aforesaid concessional interest rate;
Credit towards generating power through bio-gas (poultry/dairy farm) should be disbursed under green financing in agricultural sector;
Credit also should be disbursed to vermi-compost (alternative of chemical fertilizer) under this financing;
Credit should be disbursed in priority basis for production of crops in uncultivated land;
Banks must fulfill their targets in agri. and rural credit disbursement. In case of failure to achieve their agricultural and rural credit target, punitive measures (to deposit the undisbursed amount in BB at bank rate) will be taken.
Banks are instructed to ensure effective monitoring system so that only the real farmers get the agricultural credit timely according to the agricultural credit policy and norms without any harassment and also the proper utilization of the credit. Bangladesh Bank will continue the intensive monitoring of the whole system to reach the target of the program.
The policy, formulated in order to extend the scope of the agricultural credit, financial inclusion, utilization of technology in expansion of banking activities in rural areas, increase of money flow in rural sector, ensure food security and poverty alleviation, is expected to gain the desired result. – BB Press release
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