First, there will be an audit, and then farmers will get agricultural loan waiver benefits

First, there will be an audit, and then farmers will get agricultural loan waiver benefits

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According to the Finance Ministry, a total of 1,317,498 farmers from 15 banks will receive this benefit. The government will spend Tk 1,568 crore for this

Following the cabinet decision, the finance ministry has started the process of waiving agricultural loans with interest up to Tk 10,000. A total of 1,317,498 farmers will benefit from this loan waiver. This will cost Tk 1,568 crore from the state treasury.

Next week, the finance department of the finance ministry will give the entire amount to the financial institutions department of the same ministry. Later, the banks will receive the money from the financial institutions department. Before that, an audit will be conducted. This information has been revealed by the finance ministry sources.

The decision to waive agricultural loans up to Tk 10,000 was made in the cabinet meeting held on February 26 under the chairmanship of Prime Minister Tarique Rahman. This was a promise of the BNP in its election manifesto. Farmers in the grain, crop, fishery, and animal husbandry sectors will get this benefit. Cabinet Secretary Nasimul Gani said after the meeting that as a result of this decision, a total of Tk 1,550 crore will be waived and about 1.2 million farmers will benefit from it.

After the cabinet decision, the Finance Department of the Ministry of Finance held a meeting on March 2. In that meeting, it was decided that a total of 13 lakh 17 thousand 498 farmers will receive loan waiver facilities, not 12 lakh. This will cost 1 thousand 568 crore taka from the state treasury.

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According to the Finance Department sources, 15 banks will receive agricultural loan waiver money with interest up to 10 thousand taka. Out of these, eight are state-owned commercial and specialized banks. These are Krishi Bank, Rajshahi Krishi Unnayan Bank or RAKAB, Sonali Bank, Agrani Bank, Janata Bank, Rupali Bank, BASIC, and Ansar-VDP Unnayan Bank. Apart from this, there are seven private banks. These are Islami Bank, Al Arafah Islami Bank, BRAC Bank, Bank Asia, Uttara Bank, Union Bank, and National Bank.

8 state-owned commercial and specialized banks will receive money against the agricultural loans of 13 lakh 17 thousand 47 farmers worth 1 thousand 567 crore 57 lakh taka. And 7 private banks will receive 39 lakh taka against the loans of 451 farmers.

Salim Raihan, professor of the Department of Economics at Dhaka University and executive director of SANEM, told Prothom Alo that this decision to waive off loans will reduce the financial pressure on farmers. Along with the loan waiver, it is necessary to introduce structural reforms such as sustainable agricultural support, ensuring fair prices for crops, crop insurance, and refinancing on easy terms. If these are done, the country's agricultural sector will stand on a solid foundation in the long term.

More money for three banks

According to the Finance Department, the actual agricultural loans given by a total of 15 banks under the waiver facility are 917 crore taka and 782 crore taka in interest. In addition, the banks have another 138 crore taka in uncertain (interest suspense) accounts. The money in uncertain accounts has been excluded for waiver. The interest earned after default is deposited as uncertain, which is not considered the actual income of the bank.

Along with the principal and interest, the legal expenses against the lawsuits filed by various banks for debt collection have also been included in the waiver. The government will pay 69.1 million taka for legal expenses against the lawsuits filed by seven banks, including Krishi Bank, Rakab, Sonali, Agrani, and Janata.

As of February 25, Krishi Bank will receive 820 million taka for the loan money, including interest, against 689,628 farmers under the waiver facility. Sonali Bank is in second place. This bank will receive 350 million taka for 344,447 farmers. 169,564 farmers will receive this facility from Rakab. For this, the bank will receive 188 million 79 million taka from the government.

Among the private banks, Islami Bank will receive the highest amount of 2098 thousand taka for the waiver of loans of 228 farmers. Al-Arafah Islami Bank is in the next position. This bank will receive 1352 thousand taka for the loans of 193 farmers.

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How the loan will be waived

According to the decision of the Finance Department, Bangladesh Bank will now prepare a table, based on which the banks will send their respective information to the Finance Department. Before that, the banks will calculate the unlevered interest until February 25 and take the decision to waive the loan in their respective board of directors' meetings. No new interest can be levied on these accounts from February 26, and it will have to be completely abolished from the ledgers of the banks. If there is a loan-related case, the government will bear the stamp duty and other expenses, but will not bear the lawyer's expenses.

The Finance Department said that the government does not have the opportunity to take responsibility for the interest and principal remaining in the uncertain account. The matter will be resolved through coordination between the government and the banks.

Sources said that the Bangladesh Bank will audit the information provided by the banks on the loan waiver. Bangladesh Bank will send the audited final accounts to the government in stages. The government will later pay the audited portion to the banks. The bank will withdraw the case after paying the dues, and the banks will inform the Financial Institutions Department about the withdrawal of the case every month.

A top official of Islami Bank gave the example of Afzal Hossain, a farmer from Balugram in Gomostapur upazila of Chapainawabganj, and said that he took a loan from the bank's Rohanpur branch. Their bank recovered not only the loan amount but also the cost of the case from Afzal Hossain in 2022. Even then, he had to go to jail. In the same year, arrest warrants were issued against 37 farmers for not repaying loans of Tk 30,000 each from the cooperative bank in Ishwardi, Pabna. The government has warned the banks to prevent such incidents from happening again.

Source: Online/GFMM