Transcript
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WELCOME
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GROUP LINEUP
Name Registration No:
Omar Faruk 2010731010
Reza Nurtaz Jaman 2010731023M.H Jamil 2010731046
Md. Shamsuddin Imran 2009731012
Estehad Chowdhury 2009731029
Md. Salman Hossain 2009731004
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SUPERVISEDBY:
Mohammad Ashraful Ferdous Chowdhury
Lecturer,
Department of Business Administration,Shahjalal University of Science and Technology,
Sylhet-3114
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SEMINAR REPORTON
ROLEOFBANKSONAGRICULTURAL
DEVELOPMENT: A STUDYONSYLHET
REGION
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Agricultural credit is crucial for realizing the potential gain fromagriculture as a profitable activity. Ensuring access to credit to smallfarmers who are operating at the subsistence level is a substantive issue.Small farmers in Bangladesh do not have sufficient assets to carry on withtheir production expenditure. They depend on agricultural credit frominstitutional and non-institutional sources to meet the various expenses ofagricultural productivity. There are various inefficiencies in the institutionalsources regarding interest rate and other conditionality. Indebtedness of
peasants in Bangladesh has long been a phenomenon caused by shortage ofcash funds. Alternative credit system is required for providing peasantswith necessary funds. Unless the farmers get secured access to the sourcesof credit, they will not be able to invest in land and as such sustainabledevelopment in agriculture will not be possible. Therefore, intervention isneeded from the state as well as from the private sector. But properimplementation of the adopted policies needs to be seriously monitored. It
is necessary for the state and different organizations to carry on with theirinitiatives for increasing farmers access to institutional credit. It isindispensable to construct a strong institutional base which would be ableto provide farmers with sufficient credit facilities as and when necessary.
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CHAPTER ONE:
INTRODUCTION
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Agriculture is one of the prime sectors of Bangladeshs economy. This sector
contributes about 20% of the countrys Gross Domestic Product (GDP) and
employs 44 per cent of the total labor force. Agricultural sector contributes
significantly in respect to attaining marginal food sufficiency creating employmentopportunity, improving standard of living, and finally reducing poverty. The success
has achieved due to continuous reform of agricultural policies and its
implementation. The agricultural credit has been considered one of the crucial
factors toward sustainable development of agricultural sector particularly to increase
agricultural production. It is apparent from previous studies that credit plays an
important role in increasing agricultural productivity. The central bank of
Bangladesh has recently shifted agricultural credit policy through incorporating all
scheduled banks (including Private Commercial Banks and Foreign Commercial
Banks) under agricultural credit program. In fact, agricultural credit plays an
important role in enhancing productivity of agriculture and the participation of all
formal banks obviously added extra value. Agricultural credit system has beenadopted by the Bangladesh Bank, that is, Agricultural Credit Monitoring System.
This seminar paper also tries to show the relationship between agricultural credit
and agricultural development.
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CHAPTER TWO:Literature Review
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Studies by Farid Ahmed M. (1980) and Hasanath Ali M. & Serazul I.M
(2005) refer to earlier stages of the disbursement process . The latestworks on Bangladesh agriculture efficiency were made by Chowdhury
(2002). Khalily M.A.B & R.L. Meyer (1993) their results support the findings
of other studies that reform efforts initiated by the Bangladesh government
from 1991 to 2005 have not yet led to a real improvement in the agricultural
sector. Agricultural credit program was given more importance from 2009 by
Bangladesh Government. There is not enough seminar paper or research
about Agricultural Credit & Development in Sylhet. Few researches were
done on this topic (Farid, 2009). Their result showed that the agricultural
development is likely related with disbursement of Agricultural Credit.
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CHAPTER THREE:AGRICULTURE IN
BANGLADESH
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Agriculture is an economic sector that has to provide society withsufficient amount and quality of food and fiber production, avoidingharmful environmental effects on land, soil, air and water livestock.Agriculture is crop and animal husbandry for producing food stuffs,raw materials and services (including biodiversity and landscape)for the society.
Sectors of Agriculture:
Crop
Fisheries
Poverty alleviation
Grain storageLive-stock
Agriculture equipment
Marketing Agriculture goods
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CHAPTER FOUR:AGRICULTURAL CREDIT
IN SYLHET
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Agricultural credit is a financial term that refers to loans and other
types of credit extended for agricultural purposes. It is a credit
financing vehicle, such as a loan, bankers acceptance or letter ofcredit that is designed specifically for agriculture producer. The
credit needed by farmers to grow the agricultural sector is termed as
Agricultural Credit.
Types of Agricultural Credit: i) Short-term Loans
ii)Intermediate-term Loans
iii)Long-term Loans
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Source of Agricultural Credit:
Credit in the farm sector is available from two sources
1) Non-Institutional Sources
2) Institutional Sources
Non-Institutional Sources Institutional Sources
i) Money lenders i)Agricultural Development Bank
ii) Friends ii) Commercial Banksiii) Relatives
iv) Landlords
v) Shopkeepers
vi) Commission agents
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Programs & Policies of Bangladesh Bank in Agricultural Credit:
Agriculture being the key driving force as well as the priority sector of
Bangladesh economy, Bangladesh Bank (BB) has formulated Annual
Agricultural Credit Program and Policy for the Fiscal year 2011-12 with view
to ensuring food security of the country.
Programs of Bangladesh Bank:
The target for disbursement of agricultural credit has already been fixed at
around Tk. 13,136.91 crore for FY 2011-12 & it has been increased by
Tk.952.51 crore compared to that in FY 2010-11 (Tk. 12,184.40 crore).
Programs of Bangladesh Bank in Agricultural credit on Sylhet region:
Target( in Crore) Disbursement(in Crore)
FY 2009-10 374 237
FY 2010-11 497 411
FY 2011-12 639 193 (July-Feb)
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Policies of Bangladesh Bank:
A farmer may be sanctioned credit for up to 15 bighas (5 acres) of
cultivable land as determined by credit norms.
As per Agricultural Credit Policy, in disbursement of agricultural credit
three core sectors of agricultural credit have to be given priority compared
to other sectors. Sixty percent of agricultural credit has to be disbursed to
grain and crop sectors only.
Banks are encouraged to disburse group-based loans to fishermen in
various water bodies, haors and pools.
Bangladesh Bank will consider providing refinancing facility to
encourage credit distribution programs in haor and coastal areas areas.
Banks and other concerned institutions are directed to provide
necessary credit to successful farmers so that other farmers to get
inspired by their success.
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Contribution of Commercial Banks to the Credit Market:
All banks collectively disbursed Tk 13,136.91 crore, or 95 per cent of the
target, in farm loans in the just concluded financial year of 2011-2012
according to the Bangladesh Bank data.
State-owned, specialized, private and foreign commercial banks had a
target to disburse Tk 13,800 crore in FY 2012. In FY 2011, the banks
disbursed Tk 12,431.93 crore, or 96.50 per cent, in agriculture loans against
the target of Tk 12,184.40 crore.
The state-owned commercial banks
Sonali, Janata, Agrani and Rupaliand the two specialized banks, Bangladesh Krishi Bank and Rajshahi Krishi
Unnayan Bank in the FY 2011-12 had disbursed Tk 8,314.16 crore in farm
loans or 97.70 per cent of their annual loan disbursement target of Tk 8,510
crore. In FY 2010-11, the six banks disbursed Tk 8,457.62 crore, or 102.95 per
cent of their annual loan disbursement target of Tk 8,215 crore.
The PCBs and FCBs disbursed Tk 4,822.75crore in agriculture loan in FY2011-12, which was 91.17 per cent of their total annual loan disbursement
target of Tk 5,290 crore. In FY 2010-11, the banks had disbursed Tk 2,974.31
crore, or 81.91 crore of their annual loan disbursement target of Tk 3,631.40
crore.
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Contribution of Commercial Banks to the Credit Market on Sylhet
region:
Bank Name Target amount( in Lakh) Actual disbursement(in
Lakh)
State-owned Commercial
Bank
7713.2 3373.02
Specialized Bank 36477 11410.24
Private Commercial Bank 12005.4 1972.4
Islami Bank 6897 1894.09
Foreign Commercial Bank 807 600
Table: Total Target & Actual Disbursement of Agricultural Credit on Sylhet Region
by Various Banks (FY - July, 2011-Feb, 2012)
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CHAPTER FIVE:Data Analysis
& Findings
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Figure 1: Target & Disbursement
of Bangladesh Bank in Agricultural Credit on Sylhet Region
374
497
639
237
411
193
FY 2009-10 FY 2010-11 FY 2011-12
Target( in Crore) Disbursment( in Crore)
Target & Disbursement
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Figure 2: Disbursement Rate of Bangladesh Bank in Agricultural Credit Program
on Sylhet Region
Disbursement Rate
FY 2009-10
FY2010-11
FY 2011-12(July-Feb)
30%63%
83%
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Figure 3: Total Target & Actual Disbursement
of Agricultural Credit on Sylhet Region by Various Banks (FY - July,2011-Feb,2012)
7713.2
36477
12005.4
6897
807
3373.02
11410.24
1972.4 1894.09600
0
5000
10000
15000
20000
25000
30000
35000
40000
State-owned
Commercial Bank
Specialized Bank Private Commercial
Bank
Islami Bank Foreign Commercial
Bank
Target amount( in Lakh) Actual disbursement( in Lakh)
Total Target & Actual Disbursement
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Figure 4: Disbursement Rate of Agricultural Credit on Sylhet Region by
Various Categories Bank in FY 2011-12(July-Feb).
Disbursement Rate (FY : July, 2011 - Feb, 2012)
State-owned Commercial Bank
Specialized Bank
Private Commercial Bank
Islami Bank
Foreign Commercial Bank
74%
44%
31%
16%27%
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Figure 5: Total Disbursement, Outstanding & Recoveryof Agricultural Credit on Sylhet Region by Various Bank in FY 2011-
12(July-Feb).
0%
20%
40%
60%
80%
100%
KrishiBank
DhakaBank
Trust
BankUttaraBank IFIC Bank Mercantile
Bank LtdPubaliBank
18480.81170
30.515.75
112.6426.3
200.5
7819.24
11.50 1.25
3.420
2.45
10661.57
158.530.5 14.5
109.22 26.3 198.05
Total Disbursment( in lakh) Outstanding (in lakh) Recovery (in lakh)
Total Disbursement, Outstanding & Recovery
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Figure 6: Interest Rate of Agricultural Credit on Sylhet Region by Various
Bank.
Interest rate
Krishi Bank
Pubali Bank
Uttara Bank
Mercantile Bank
Trust Bank
Dhaka Bank
IFIC Bank
10%
13%
13%
13%
15%
13%
13%
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Figure 7: Total number of borrower & defaulter in agricultural credit
program on Sylhet region from 2009-2012 (July-Feb).
79714
572 56 30 27 425 258
43045
7 4 0 0 12 70
10000
20000
30000
40000
50000
60000
70000
80000
90000
Krishi Bank Pubali Bank Uttara Bank Mercantile Bank Trust Bank Dhaka Bank IFIC Bank Ltd
Total borrower Total defaulter
Total Number of Borrower & Defaulter
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Figure 8: Total number of farmer's bank account (2006-12) in fourdistrict of Sylhet division.
110611
48502
116794
155345
0
20000
40000
60000
80000
100000
120000
140000
160000
180000
Sylhet Moulovibazar Hobigonj Shunamgonj
Total Number of Farmer's Bank Account
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Figure 9:Total Production
oThe actual production in Khorip-1 (Aamon), Khorip-2 (Aaush) and Robi (Boro) seasons was respectively 261266 metric ton,
760594 metric ton and 1537602 metric ton in FY 2007-08.The total production was 2559462 metric ton in 2007-08.
o In 2008-09 the actual production in Khorip-1 (Aamon), Khorip-2 (Aaush) and Robi (Boro) seasons was respectively 245581
metric ton, 825531 metric ton and 1391442 metric ton. The total production was 2559462 metric ton in 2007-08.
oIn 2009-10 the actual production in Khorip-1 (Aamon), Khorip-2 (Aaush) and Robi (Boro) seasons was respectively 253493metric ton, 900535 metric ton and 1555690 metric ton. The total production was 2709718 metric ton in 2009-10.
oIn 2010-11 the actual production in Khorip-1 (Aamon), Khorip-2 (Aaush) and Robi (Boro) seasons was respectively 228628
metric ton, 931953 metric ton and 1669404 metric ton. The total production was 2829985 metric ton in 2010-11.
oIn 2011-12 the actual production in Khorip-1 (Aamon), Khorip-2 (Aaush) and Robi (Boro) seasons was respectively 293099
metric ton, 994462 metric ton and 1715462 metric ton. The total production was 3003023 metric ton in 2011-12
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
2007-08 2008-09 2009-10 2010-11 2011-12
A.P (k-1) in M.T
A.P (k-2) in M.T
A.P ( R) in M.T
Total Production ( in M.T)
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Figure 10: Relation between total Disbursement & total Production
Total disbursement in FY 2009-10 was 2370000 thousand & total production was
2709718 metric ton,
In FY 2010-11 total disbursement was 4110000 thousand & total production was2829985 metric ton,
In FY 2011-12 (July-Feb) total disbursement was 1930000 thousand & total
production was 2203023 metric ton.
So, Agricultural production is increasing as a result of increasing Agricultural
credit
0
500000
1000000
1500000
2000000
2500000
3000000
3500000
4000000
4500000
FY 2009-10 FY 2010-11 FY 2011-12 (July-Feb)
Total Disbursment ( inThousand)
Total Production (in MetricTon)
Relation between total Disbursement & total
Production
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Statement 1: Agricultural credit is important for the development
30%
70%
0% 0% 0%
0%
10%
20%
30%
40%
50%
60%
70%
80%
Agree Strongly agree Disagree Strongly disagree neither agrees nordisagrees
Importance of AC
Importance of AC
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Statement 2: The performance of banks for agricultural development is not
satisfactory
0%
10%
20%
30%
40%
50%
60%
Agree Strongly agree Disagree Strongly disagree Neither agree nordisagree
Banks
Farmers
Performance of Banks
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Statement 3: The procedure of getting agricultural credit is difficult
67%
23%
0%
10%
20%
30%
40%
50%
60%
70%
80%
yes No
Difficulties in getting AC
Difficulties in getting AC
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Statement 4: Agricultural credit is beneficial for the farmers of Bangladesh
84%
16%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
yes No
Beneficience of AC
Beneficience of AC
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Statement 5: Agricultural credit helps to increase production
92%
8%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
yes No
Increase of production
Increase of production
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CHAPTER SIX:Recommendations and
Conclusion
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Recommendations:
Sufficient loans in time should be supplied to farmers so that they never feel thewants of agricultural capital to invest in farmland.
Though interest rate is comparatively lower than other sectors, it is to beminimized between 5% to 6%
Regular visiting and planned monitoring from banks should be increased sothat borrowed money is utilized accurately to have a good return.
Government must have to play a vital role in uprooting communication gapamong banks and peasants through infrastructural development.
More rural branches should be launched by banks to make direct link withmarginal farmers.
Awareness programs on loans and positive approach of it among marginalpeasants are required to be organized.
Expanding time duration of loan in case of failure to repay is to be kept underconsideration.
Promotional activities at root level is a crying need to involve farmers as wellas first-hand training by banks especially by agricultural bank need to beintroduced.
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CONCLUSION:
Agricultural credit thus assumes great importance in an agrarian county that
us trying to modernize traditional agriculture. Agricultural sector financial
access has expanded over the decades with the combined efforts of scheduled
banks and NGO-MFIs. Not to mention, Bangladesh bank policy on agriculturalcredit has promoted the access to credit for small and marginal farmers.
Although PCBs and FCBs contributed limited in respect to credit disbursement
but their participation in agriculture financing deemed as major movement of
formal private banks to financing in rural Bangladesh. Many PCBs and FCBs
have formed linkages with NGO-MFIs for expanding market horizon in aviable and sustainable manner, while NCBs and SBs have been using their
existing branch network to do so. Since, there is a significant positive
relationship between agricultural credit and production, there should have
demand for favorable agricultural credit policy and implication which can
increase the budgetary allocation as well as will take steps to overcome thetarget shortfall. Finally, there should have incentive for financial intermediaries
to encourage them to financing the agricultural sector and rural areas in a
sustainable manner.
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ANY QUESTION
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THANKYOU
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