Agri, SME financing

Two specialised govt banks seek Tk 110b from central bank

PKB also wants Tk 10b loan from BB

| Updated: November 26, 2022 15:34:10

Two specialised govt banks seek Tk 110b from central bank

Two state-owned specialised banks sought Tk 110 billion from the central bank's re-financing scheme to disburse loans in agriculture and small and medium enterprise (SME) sectors, officials said.

The Bangladesh Krishi Bank (BKB) sought Tk 100 billion, while the Rajshahi Krishi Unnayan Bank (RAKUB) sought Tk 10 billion to enhance their loan-disbursement capacity, they added.

The Financial Institutions Division (FID) under the Ministry of Finance backed their loan pleas and recommended the Finance Division to arrange the required state-guarantee, so that the central bank can grant the loans from its refinancing scheme.

A senior FID official told the FE on Thursday that the BKB mainly disburses farm loans across the country, while the RAKUB does the same in Rajshahi and Rangpur divisions.

However, the banks' paid-up capitals are 'very small' compared to their work area and fund requirement.

The official also said the central bank has refinancing schemes for the banks, from where they can get funds at 4.0 per cent interest rate and lend the farmers at 8.0 per cent interest rate.

"We have written to the Finance Division to extend state guarantee, supporting their loan pleas," he added.

A Finance Division official acknowledged receiving applications from the two banks, and said they scrutinised the documents.

He said after scrutinising the RAKUB's document the division sought some more papers, which the bank sent through the FID.

Meantime, the Probashi Kallyan Bank (PKB) also sought Tk 10 billion loan from the central bank at bank rate to lend money to its clients.

The bank disbursed Tk 9.0 billion in last fiscal year (FY), 2021-22, and has planned to disburse Tk 12 billion in current FY, 2022-23.

BKB Managing Director Ismail Hossain told the FE that the bank's paid-up capital is small. If the government provides support from the BB's refinancing scheme, its liquidity would increase and loans can be given to higher number of borrowers.

"It's not for any special scheme. The fund is needed to carry out the bank's regular activities."

The BKB's authorised capital is Tk 15 billion, and paid-up capital is Tk 9.0 billion.

Mr Hossain also said in the current FY, the bank has a target to disburse Tk 100 billion loan to farmers, SMEs, and agro-based industrial units.

RAKUB Managing Director Zahidul Haque told the FE that the bank had two separate loan ceilings of Tk 5.0 billion each from the refinancing scheme in the past. This time it sought approval for granting Tk 10 billion ceiling in one loan instead of two.

The bank's authorised capital is Tk 10 billion, and paid-up capital is Tk 8.2 billion.

He said the central bank has refinancing schemes to promote agriculture and SME sectors, from where the banks can get low-cost fund.

Initially, the banks disburse loans from their own fund. When the BB finds that the loans are given in line with the terms and conditions of the refinancing scheme, then the banks are given the money.

"The banks, which provide funds to agriculture and SME sectors, take loans from the central bank's refinancing scheme," he added.

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