- Md. Touhidul Alam Khan
As the first generation private commercial bank of the country, National Bank Limited (NBL) has been at the forefront of a four-decade-long journey, marked by pivotal contributions such as fostering the growth of the country’s garment industry, pioneering partnerships with Western Union for foreign currency collection, and spearheading Bangladesh’s introduction to credit card business through Mastercard. Moreover, NBL has consistently played a vital role in disbursing agricultural loans, a core aspect of its operations. The bank’s extensive involvement in the agricultural sector at the national level often goes unnoticed by many. This article aims to shed light on NBL’s active participation in agricultural loan disbursement programs.
Agricultural and Socio-economic Development through Barendra Project in Northern Bangladesh
National Bank Limited has been actively involved in disbursing credits directly to farmers long before the current agricultural credit system was established. Since 1992, National Bank Limited and Barendra Development Authority have been working for the development of the socio-economic system of farmers in the deep tubewell areas of 16 districts of North Bengal. These 16 districts are Rajshahi, Naogaon, Chapai Nawabganj, Thakurgaon, Panchagarh, Natore, Pabna, Bogra, Sirajganj, Jaipurhat, Gaibandha, Rangpur, Nilphamari, Dinajpur, Kurigram and Lalmonirhat.
Allocation of Agricultural Credit in Accordance with Set Objectives:
The agricultural sector holds huge importance in Bangladesh’s economy, directly and indirectly contributing to food production, addressing nutritional challenges, boosting export revenues, generating employment opportunities, and bolstering the country’s gross domestic product (GDP). To ensure adequate credit supply to this vital sector, the Agricultural Credit Department of Bangladesh Bank has been assigning agricultural and rural credit distribution targets to all state-owned specialized banks, state-owned commercial banks, foreign banks, and private commercial banks since the fiscal year 2008-09. NBL has consistently played the leading role in meeting these targets by utilizing its own resources rather than relying on Micro-Finance Institutions (MFIs) for disbursing agricultural and rural loans. Notably, NBL has not only achieved 100% of the targets in certain fiscal years but has also demonstrated a commitment to returning funds deposited with Bangladesh Bank in previous years due to target non-fulfillment, through additional distribution efforts. With a focus on alleviating the debt burden on farmers, the Bank has extended loans to remote areas as per the directives of its esteemed Board of Directors. In the current fiscal year, against Bangladesh Bank’s target of Tk. 252.00 crore, NBL has disbursed Tk. 207.71 crore to 16,555 borrowers across various agricultural sectors. Notably, Tk. 192.71 crore (93%) was disbursed from its own resources, while Tk. 15.00 crore (7%) was disbursed through MFI linkages. In the preceding fiscal year 2022-23, agricultural and rural loans amounting to Tk. 266.02 crore were disbursed among 19,143 borrowers, with 99 percent being disbursed from National Bank’s own resources.
Disbursement of Agricultural Credit to Import Substitute Crops Sector:
NBL remains steadfast in disbursing loans, backed by government-provided interest subsidies, for the cultivation of pulses, oilseeds, spices, and maize, aiming to conserve the nation’s hard-earned foreign exchange. In the preceding fiscal year 2022-23, loans totaling Tk. 4.91 crore were disbursed to 550 borrowers, surpassing the Tk. 4.22 crore target. As of February 2024 in the current fiscal year 2023-24, Tk. 4.35 crore has been disbursed to 504 borrowers against the Tk. 4.50 crore target. We aim to exceed our targets this time around.
Agricultural Loans in Enclave Areas:
With the incorporation of the 111 enclaves into Bangladesh under the Bangladesh-India Land Boundary Agreement, they have now become an integral part of Bangladesh’s territory. In an effort to facilitate overall economic growth, ensure optimal land utilization, safeguard residents’ rights akin to those in other regions, and bolster agricultural activities, the decision was made to extend agricultural loans to the inhabitants of these areas. In 2015, recognizing the agricultural potential of the region and the need for modern banking services, NBL established a branch in Bhaulaganj. Since its inception, this branch has been instrumental in providing modern banking facilities to the local community, including tribal groups, and has consistently disbursed agricultural loans at a noteworthy rate, earning recognition from Bangladesh Bank on multiple occasions.
Poverty Alleviation:
In an effort to uplift low-income individuals and integrate them into mainstream society, National Bank Limited initiated the “Poverty Liberation” loan scheme in 2016. This program offers loans with low interest rates and flexible terms to facilitate comfortable living for its beneficiaries. The “Poverty Alleviation” loans primarily target small entrepreneurs, professionals, handicraft and cottage industries, as well as marginal and landless farmers. In the first phase, a total of Tk. 15.00 crore was allocated under agricultural credit, which has already been successfully disbursed. This sum has been distributed among 2,020 marginalized and underprivileged individuals, with a notable inclusion of 933 women. The loans have supported the acquisition of 70 power tillers and aided 1,950 farmers engaged in various small-scale income-generating activities such as cattle rearing, crop cultivation, and fisheries. NBL’s investment in these income-generating sectors for marginalized communities is seen as a significant contribution to the country’s economic development. Bangladesh Bank has consistently acknowledged and praised National Bank’s efforts in this regard.
Welfare of the disabled:
A recent instance showcasing NBL’s involvement in Bangladesh Bank’s welfare initiatives is the provision of loans to 10 women with disabilities in Barguna district. Despite the absence of a branch in the vicinity of Barguna, the bank swiftly disbursed agricultural loans to these individuals. Bangladesh Bank has already recognized and commended the bank’s prompt action in this regard.
Incentive package during Covid-19 period:
During the Covid-19 pandemic, NBL played an active role in the stimulus packages announced by Bangladesh Bank, including the Tk. 5,000 crore and Tk. 3,000 crore packages. Agricultural loans totaling Tk. 49.41 crore were disbursed to 2,739 customers, although the allocated target for NBL was Tk. 122 crore under the incentive package. Additionally, Tk. 25 crore from the package have been fully distributed.
National Bank on Bangladesh Bank Refinancing Programme:
In recent years, NBL has been actively involved in all agriculture-focused programs initiated by Bangladesh Bank. NBL has successfully disbursed 100% of the allocated amount of Tk. 5.00 crore in the fiscal year 2022-23 among 272 customers as part of the refinancing initiative of Tk. 1,000 crore to enhance wheat and maize production in the country. In the subsequent phase within the same sector, Tk. 10.57 crore has been disbursed to 1,160 borrowers as of February 2024, against the allocated target of Tk. 25 crore for the fiscal year 2023-2025. Additionally, under the ongoing refinancing scheme namely, “Ghore Fera”, Tk. 2.72 crore has been disbursed to 272 individuals as of February 2024, out of the allocated Tk. 5 crore for NBL. Moreover, to boost food production, NBL disbursed loans amounting to Tk. 26.24 crore to 2,818 individuals against the allocated target of Tk. 55 crore. Detailed efforts are underway at NBL to meet all these targets effectively.
In conclusion, it’s noteworthy to highlight that since its inception, National Bank Limited has made commendable contributions to the overall development of the country, particularly in the distribution of agricultural loans. By the grace of the Almighty, we are committed to sustaining and furthering these efforts in the future.
Author: Md. Touhidul Alam Khan, Managing Director & Chief Executive Officer, National Bank Limited