Loan disbursement for the spice sector increased only 8 percent last fiscal year in spite of a big subsidy for the sector.
In fiscal 2013-14, banks gave around Tk 81 crore in loans to the spice sector against the target of Tk 91.18 crore.
The loans to the sector come with an interest of only 4 percent, as the government gives the banks a 6 percent subsidy against the loans.
The government introduced the subsidy for the sector in fiscal 2009-10 with the aim to cut spending of foreign currency and to lower the price of spices.
At the beginning, only the public sector banks were giving the loans but later private and foreign banks were included in the programme.
Despite the low interest rate, the banks are not disbursing loans as per the targets set for them, much to the central bank's disappointment.
At a recent meeting of the Bankers Committee with Bangladesh Bank Governor Atiur Rahman in chair, the banks were urged to increase their disbursement to the spice sector.
However, an official of the central bank said the banks are not much interested to give loans to the sector, and many farmers in rural areas are not even aware of the availability of loans at such a low interest rate.
Subsequently at the meetings, the banks were told to launch a publicity campaign among the farmers.
Meanwhile, an official of a private bank said, after counting the subsidy the government provides for these loans, the total interest stands at 10 percent, which is near about their cost of fund. The average interest rate on credit in banks is more than 13 percent.