Role of BKB in Agricultural Financing: Challenges and Prospects

Abstract

‘Food for all’ is the prime commitment of the present government. As such the government has given top priority to agriculture sector to achieve self-sufficiency in food grains by 2013 through increased production. In fact, agriculture is regarded as the most important sector of Bangladesh economy. Though the direct contribution of the agriculture sector has decreased slightly, it has indirect contribution to the overall growth of GDP. The broad objective of the study is to highlight the socio- economic impact of the agricultural credit given by BKB during the FY 1999-2000 to FY 2014-15. Data and information considered relevant have been presented and analyzed in some cases up to FY 2014-15). Methodology of the study consists of selection of sample, preparation of questionnaire, nature and sources of data, judging the validity of data, techniques of data analysis, selection of dependent and independent variables, testing of hypotheses and evaluation techniques of financial performance of bank etc. The present study includes Head Office and ten branches of BKB during the Dhaka, Narayangonj, Gazipur, Jhenidah and Kushtia district. The branches of Dhaka division are Narayangonj sadar, Fatullah, Rupgonj, Tongi, Savar, Beleswar and Dhamrai. Jhawdia, Vatoi Bazar, Khoksha branches are selected from Kushtia and Jhainaidah district of Khulna division. Branches are selected on the basis of availability of data and convenience in data collection. Two divisions have been selected for a comparative study of their differences. 50 executives from Head office, five officers and staff and fifty borrowers from each of the branches have been selected from the list of the borrowers and their presence at their branches. Various statistical tools like Mean, Standard Deviation, Coefficient of Variation, Time Series Analysis, Ratio Analysis and Percentage are used for interpreting variability, uniformity, stability and consistency of data. MS-Excel and SPSS Program are used for data analysis. The present study concludes that there is a moderate positive correlation between cost of fund and recovery rates and highly positive correlation between volume of disbursement and recovery rates during the study periods of BKB. There is a significant difference in loan disbursement among the divisions and there are significant variations in loan disbursement among the various years during the study period. Recovery is not correlated with the sex of the borrowers. But other socio-economic indicators of the borrowers like education, age, number of children, land holding, income, expenditure and savings are positively correlated with the recovery of the loan. Among the sampled borrowers 87% were male and 13%were female respectively. It is suggested that BKB may give attention for women for disbursing loan. Average age of borrowers is 44 years. All sample borrowers said that they have been sanctioned loan less than their demand by BKB. BKB should sanction loan according to the actual need of the borrowers because without actual amount of fund project would not be healthy. It is suggested that BKB may give opportunity to share croppers sanctioning agricultural credit with liberal terms. On an average 65% loan is being used in crops sectors, vegetables and fruit production. So, it is suggested that BKB may increase its loan in livestock, fisheries and agro equipment etc. The concerned authority may simplify documentation process, identify sick projects clearly and follow proper selection of borrowers.