Idle Money in the Banks to lend to NGO – MFI

Aug 4, 2013

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Dhaka, 4th August 2013. Today in press conference a network of NGO-MFI (Micro Finance Institution) demands for single digit interest rate in the agricultural loan for the sake of agricultural development in the country. The leaders also demand for the huge idle money in the Banks to be reinvested in the agriculture sector through the NGO-MFI who closely work with the small scale farmers in Bangladesh.
The Press conference today is jointly organized by CDF (Credit and Development Forum), INAFI-Bangladesh (International Network for Alternative Financial Institution) and COAST Trust at the National Press Club. Mr. Abdul Awal the Executive Director of CDF moderates the press conference while Mr. Sayed Tareque Harun of COAST reads out the position paper. The other speakers of press conference are Mr. Atiqun Nabi the Executive Director of INAFI- Bangladesh and Mr. Rezaul Karim Chowdhury, the Exeutive Director of COAST. Mr. Mostafa Kamal Akhanda of COAST gives the welcome speech.
On behalf of the group Mr. Tarik Syed Harun, the Assistant Director of COAST states in the position paper that, only in 2011 NGO –MFI has successfully provided collateral free loans in agriculture, fishery and livestock covering 207 million borrowers amounting nearly 400 billion Taka. But the NGO MFIs now have been suffering from capital crisis while the commercial banks have idle money of nearly 72 thousand crore Taka.
Mr. Tarik Syed Harun says, NGO-MFIs borrow money from the commercial banks at up to 16% interests with many hidden costs. It is demoralizing for them to maintain the high interest rate to cover the loan disbursement to the beneficiaries and its operational cost. The contribution of the Bank loans in 2008 to the entire fund composition of the NGO-MFIs was 19.13% but it reduced to 12.84% by the 4 years due to the high interest. Aalthough the contribution of agriculture in GDP has been reduced but still it provides 49% employment in Bangladesh, he adds.
Mr. Abdul Awal of CDF says that, the banks providing credit to the NGO-MFI must be collateral free while these NGO MFI have been giving this loan to the poor collateral free. He also mentions that there is no instruction from Bangladesh Bank for taking collateral from NGO MFI. He adds that, these loans could also be considered as a part of the corporate social responsibility (CSR).
Mr. Atiqun Nabi of INAFI said that, the idle money in the Banking sector, in fact, is the public money, so, it should be utilized for the greater interest of the people.
Mr. Rezaul Karim Chowdury mentions that, in terms of climate change impact, Bangladesh will lose 30 to 40 per cent of crop loss in future. The country didn’t receive foods even having the capability of paying in the crisis out broke in 2008. Countries like Thailand and Vietnam maintains 6-7 per cent interest rate for agricultural loans and they are quite solvent in food. Bangladesh should consider the lower interest rate in agricultural loan to face future challenge of climate change and to attain self sufficiency in food.