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Major NGOs violating BB's loan-disbursing directives
Md. Asiful Huq
12/25/2005
Country's major NGOs are frequently violating the Bangladesh Bank's (BB) guidelines of providing two months grace period in recovering loans from small agri-borrowers.
Besides, the loan instalments are to be paid after 15 and 30 days, whereas many farmers are burdened to repay these on weekly basis, which is also a clear violation of BB directives.
These irregularities were noticed while visiting the Asian Development Bank (ADB)-financed Northwest Crop Diversification Project (NCDP) in Sirajganj, Natore and Bogra districts recently.
In many cases the NGOs start loan-recovery soon after disbursement. Farmers, borrowing small amount of money from these NGOs are forced to start repaying the loan just after a week after borrowing.
Describing their sufferings some farmers said, after getting the loan it takes about four to five months to get return from the investment. But the NGO workers press the farmers to pay the instalments soon after borrowing. As such, they are sometimes compelled to sell the households, cattle, ornaments or other belongings to manage the required money.
Some farmers also alleged that it was made compulsory to own 0.5 to three acres of land to get loan facility. But some NGOs are not following the criteria and providing loan to people, having no land or not involved in agriculture.
The NCDP started from January 2001. It is being executed by the Department of Agricultural Extension (DAE) and BB. Government agencies like LGED, RAKUB and NGOs like DAM, Proshika, BRAC, RDRS and GKF are also participating in it.
The project, costing over Tk 3.419 billion will provide credit to 1,60,000 farmers, with the maximum range of Tk 20,000 at a time, for agri-production and agri-business promotion.
Under the project Tk 493.50 million has already been disbursed as production credit to 91,095 farmers until September 2005.
This loan has been provided at a lower interest rate, so that the farmers can change their lot by utilising it. However, it was seen in many cases that the interest soared higher than the interest charged by the commercial banks.
In some cases it was seen that the rate of interest on disbursed loan varied between 20 to 25 per cent. But it was supposed to be 14 per cent, according to the loan disbursement criteria.
Besides, the loans are to be repaid in monthly instalments, whereas many farmers have to repay these on weekly basis, making huge financial burden for them.
Talking to FE, ADB Country Director Hua Du expressed his deep concern over the higher interest rate. He also said that in future ADB would seriously consider taking necessary steps to ensure that the farmers could get loan at a lower interest rate.
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