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Banks to disburse farm credit thru Tk 10 accounts

  • Anisul Islam Noor
  • 30 August, 2021 12:00 AM
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Banks to disburse farm credit thru Tk 10 accounts

The central bank has initiated a process to disburse loans to farmers through the Tk 10 accounts.

Eligible farmers will get the loans within 10 days after submitting their applications.  

Bangladesh Bank (BB) said the banks have to send an acknowledgement letter to each of the loan applicants. If the loan application can not be considered or the loan disbursement is delayed, valid reasons need to be described in the files for inspection by Bangladesh Bank.

The central bank has instructed its officials to increase monitoring and supervision at the field level to bring pace in farm loan disbursement by simplifying the policies, said Md. Abdul Hakim, General Manager of Agriculture Credit Department of BB.

All the issues have been simplified in the agriculture and rural credit policy (ARCD) for the current fiscal so that the farmers can get farm loans without facing any harassment and complexities, he said.

He said the central bank encouraged banks to disburse farm loans through their branches, sub-branches and agent banking channel instead of micro-financial institutes (MFI).

The Tk10 farmers’ accounts are also used to disburse different government-declared incentives including seeds and diesel oil subsidies to the farmers.

BB also encourages farmers to use the Tk10 accounts for regular banking activities, such as savings, withdrawal and remittance collection, Md. Abdul Hakim said.

BB suspended excise duty and levy on up to Tk 1.0 lakh deposited in the Tk10 farmers’ accounts and banks would provide loan up 90 per cent of the deposit in these accounts without any guarantee or collateral.

Banks have to provide 1 to 2 per cent additional interest/profit on the balance of the accounts and banks could not cut any fee or charges for maintaining Tk10 bank farmers’ accounts.

Banks can provide farm loans of up to Tk 2.5 lakh without CIB (credit information bureau) report that is a must for other types of loans.

Dr. Jahangir Alam Khan, an agricultural economist and researcher, told the Daily Sun that the farmers will be benefited more from a liberalized agriculture credit policy.

“Disbursing agriculture credit through the Tk 10 accounts is a very time befitting initiative, which will help farmers and the banking network,” Jahangir, also Ekushey Padak in 2020 winner, said. “We found in a study that around 30 to 35 per cent of farmers have remained out of the institutional loan, they depend on different associations or individuals for loans with very high interest rates,” he added.

If only half of the farmers could be included in the banking channel, both the farmers and banks will be benefited, as they (farmers) will save some money in the banks also, said Dr. Jahangir.

BB introduced Tk10 accounts for the farmers in 2010 as one of the most significant financial inclusion initiatives to bring rural people living on agriculture under the umbrella of formal financial services.

As of March 2021, the total number of accounts for the farmers reached 9.83 million which is 1.08 per cent higher than that of the previous quarter. On the other hand, the total deposit in the accounts for the farmers reached Tk 4.22 billion, which is 3.81 per cent higher than that of the previous quarter and 16.68 per cent higher than that of FY20.