The central bank fixed the target of disbursing Tk 218 billion as agriculture credit among deserving farmers across the country with a special emphasis on poverty alleviation and ensuring food sufficiency. Every year the country's banks are forced to fulfil a set target of agricultural credit disbursement. But, it does not sound good that the volume of agriculture credit decreased by Tk 6 billion year-on-year in the first seven months of the current fiscal year.
Nowadays a good harvest is much dependent on the use of high yielding varieties of seeds, other modern inputs and machinery. Farmers especially those who do not have easy access to financial resources cannot engage them in farming activities properly. This is a major drawback in the effort to achieve self-sufficiency in food and alleviation of poverty.The poor access to finance when affects a large section of crop-growers is bound to impact the agro-economy negatively and thereby put a bar in the overall development of the country.
The agricultural sector, more so the poor farmers need capital at reasonable interest rates. But, most bankers give loans to traders and industrialists who have enough transaction with the banks and also assets to offer as collateral and can pay high interest. In this way, the objective of the government to reach finance to farmers is mostly not attained. Thus, farmers' access to credit lines remains one of the major problems in rural Bangladesh.
The high cost of reaching individual farmers for small loans, securing guarantees for the loan, receiving proper collateral for the loan, assessing the risks of projects are the other issues that affect the farm loan disbursement. In many cases, small or marginal farmers usually do not valid collateral like a valid land deed. Even if they have the document mostly it is not updated.
So the bankers are reluctant to extend credit because of their apathetic unwillingness to take the risk of disbursing agro-loans at relatively low interest rates. Also, since most bankers do not have an agricultural background, they do not understand the credit needs of farmers well. The move to ensure easy access to agro-loans should be pursued in right earnest and with due diligence.