The central Bangladesh Bank has instructed all scheduled banks through the issuance of a circular to open separate credit divisions dedicated to agricultural lending in order to give more focus to the sector.
Citing that agricultural loan origination, disbursement, and other related ag finance activity needs increased supervision and more intense monitoring, the central bank requested that all banks complete all formalities necessary to open the specialized divisions by July 7.
The circular was sent by Bangladesh Bank to the chief executives of all 39 private and nine foreign banks operating in Bangladesh, including state-owned Rupali Bank and specialized BASIC Bank. The directive states that each branch must have at least one officer assigned to conduct agricultural related financing activities including the selection of clients, evaluation of loan proposals, approvals, disbursements, collection of credit, and participation in district and agricultural loan committee meetings. Krishi Bank and Rajshahi Krishi Unnayan Bank are specialized in agricultural credit, while the state-owned Sonali, Janata, and Agrani banks already have agricultural lending divisions.
The central bank has set the target for agricultural credit disbursement at Tk 155.5 billion (US$2 billion) for the financial year beginning July 1, and has developed a Tk 2 billion (US$25.7 million) refinancing fund to give access to credit to marginal farmers.
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