Another 3 months to disburse farm stimulus

Bangladesh Bank yesterday extended the deadline to disburse the Tk 5,000 crore stimulus package for entrepreneurs in the farm sector by another three months following lacklustre lending.

When the package was announced in April last year, banks were asked to disburse the fund by September 30.

However, they repeatedly exhibited poor performance to this end, forcing the central bank to extend the timeframe thrice.

The central bank issued a notice in this regard asking lenders to disburse the stimulus package within June 30.

Banks disbursed 72.08 per cent of the stimulus package as of March 15, a central bank official said.

Bangladesh Bank has repeatedly asked the 43 lenders that signed participation agreements to disburse loans from the stimulus fund to take the required measures to ensure easy access to finance for farmers.

"But they have not paid heed to this end," the official said.

Banks usually disburse farm loans through microfinance institutions (MFIs).

However, the stimulus package has to be disbursed through bank branches, creating difficulties for them to give out the loans in a smooth manner.

"Since some private banks have poor relations with farmers, many of them are reluctant to give out loans to the farm sector," he said, adding that these are the main factors that contribute to the slow disbursement trend.

The repayment tenure for loans from the stimulus package is 18 months, including a grace period of six months at both the bank's and client's end.

Banks will borrow from the refinancing scheme at 1 per cent interest and lend at 4 per cent.

Farmers engaged in six agricultural sub-sectors are entitled to enjoy the low-cost fund.

These are: fruits and flowers, fisheries, poultry, dairy, livestock and the businesses selling agriculture commodities.

The central bank had earlier said a lender was allowed to disburse a maximum of 30 per cent of the loans for a sub-sector against the fund allocated for them under the package.

But the latest notice permitted banks to increase the disbursement ceiling, allowing them to give out 40 per cent against their allocation.