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The central bank on Wednesday signed an agreement with BRAC on a Tk 500 crore fund for collateral free loans to some 300,000 sharecroppers, the first of its kind in Bangladesh, reports bdnews24.com.
The Bangladesh Bank’s agriculture loan and special programme director general SM Moniruzzaman and BRAC director (finance) S M Koiri signed the deal on the fund titled ‘refinancing scheme’ .
After the deal, governor Atiur Rahman said: “The neglected sharecroppers do not get the farm loans given by the banks. But half of the farmers of the country are sharecroppers. “The central bank has taken the project keeping the sharecroppers in view,” he said.
Under the initiative, BRAC, the largest NGO, will borrow from the refinancing scheme at 5 per cent interest and distribute collateral free loans to sharecroppers at 10 per cent.
Deputy governor Nazrul Huda said the loan will be disbursed among some 300,000 sharecroppers of 150 upazilas of 35 districts.
Of Tk 500 crore fund, Tk 450 crore would be given in crop loan and Tk 50 crore in agriculture equipment loan.
BRAC executive director Mahbub Hossain said a farmer would get not more than Tk 20,000.
Farmers who did not pass the SSC exams would be come under the scheme, he said. The BB governor said BRAC would not realise the loan repayment installments as it does in case of regular credit. The installments would be payable based on harvest seasons.
The central bank will also see if the real sharecroppers are getting loans, Rahman said. It will take up similar projects with other NGOs if the scheme proves successful, he said. BRAC chairman Fazle Hasan Abed said though it was risky to distribute loans to farmers they had decided to give loans to sharecroppers.
The loans would be given though forming organisations with the sharecroppers, he said. “We have given 100 per cent guarantee to Bangladesh Bank much earlier. BRAC will face the risk of the project if any,” Abed said.
Rahman, the central bank chief, told bdnews24.com on Tuesday: “For the first time in the history of Bangladesh a fund has been created for sharecroppers which will play an immense role in development of agriculture.”
He said sharecroppers historically had little access to loan facilities as they usually had little or no collateral to guarantee their debt.
A number of NGOs applied to take part in the scheme, but BRAC was selected on the workability of their application, a BB official told the news agency.
The central bank earlier asked all government, private, specialised and overseas banks to assist in distributing Tk 11,500 crore in agricultural loans during FY 2008-09, of which over TK 9,000 crore has been disbursed to date.
Banks have disbursed farm loans of Tk 9, 284 crore in 2008-09.

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