Banks reluctant to give loans to marginal people from BB fund [ Tritiyo Matra News ]

Banks reluctant to give loans to marginal people from BB fund

Local August 10, 2016

Banks are reluctant to disburse loans to Tk 10-account holders by taking fund from the Bangladesh Bank refinance scheme of Tk 200 crore as they (banks) think that the rate of interest on the credit product is lower than that of other loans.
Due to the banks’ stance, marginal people are being deprived of loans under the scheme, BB officials said.
According to the latest BB data, the 32 banks which signed participation agreements with the central bank to use the refinance fund, disbursed only Tk 22.05 crore, or 18.25 per cent of their annual target of Tk 120.82 crore, in the first six months of 2016.
A BB official told New Age on Tuesday that the banks had not taken adequate measures to disburse the loans to marginal people considering the rate of interest on the credit product was lower than that of other loans.
A client is allowed to get maximum Tk 50,000 in credit from banks for one year under the refinance fund. The client gets a six-month grace period for repaying the loan.
Some banks think that the credit limit for a single client is not profitable for them.
Against the backdrop, the BB on Tuesday arranged a meeting with the managing directors and chief executive officers of all banks and asked them to speed up their credit programmes under the refinance fund.
The central bank asked the remaining banks, which are yet to sign participation agreement with it, to take initiative in this connection in the shortest possible time so that they can use the refinance scheme.
BB deputy governor SK Sur Chowdhury presided over the meeting.
The BB asked the signatory banks to fulfil their respective annual targets within December of this year and to use their branch network in disbursing the loans.
The banks will have to use the microfinance institution (MFI) network to disburse the loans if they have no branches available in rural areas, the BB official said.
The BB data showed Sonali Bank disbursed Tk 5.63 crore in loans under the scheme in the first six months of 2016 against its annual target of Tk 25 crore, Agrani Bank Tk 46.19 lakh against Tk 10 crore, Janata Bank Tk 3.18 crore against Tk 20 crore, Rupali Bank Tk 9.90 lakh against Tk 6 crore.
Sonali Bank acting managing director Dider Md Abdur Rob told New Age on Tuesday that the state-owned bank would take required measures to speed up loan disbursement under the refinance scheme.
He said, ‘Sonali Bank will achieve its annual target by December. The bank will take motivational programmes among its officials to speed up the loan disbursement.’
South Bangla Agriculture and Commerce Bank managing director Md Rafiqul Islam said that his bank had already taken initiative to disburse the loans under the refinance scheme.
Marginal and landless farmers, small shop owners, hawkers and the people affected by river erosion having Tk 10 accounts are allowed to get loans under the BB’s refinance scheme at the maximum interest rate of 9.5 per cent.
Banks impose maximum 7 per cent interest rate if they disburse the loans through microfinance institutions.
Microfinance institutions are allowed to impose highest 9.5 per cent rate of interest on the loans.
Banks receive the fund from the central bank’s refinance scheme with an interest rate of 5 per cent.
The BB, however, provides 3.5 per cent subsidy to banks against their disbursed loans under the scheme. But, the weighted average interest rate on lending stood at 10.39 per cent in June.