BB rejects Tk 1,439cr compensation demand of BKB, Rakub

The central bank slashed claims for compensation from Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank for 1,439 crore for losses on agricultural loans at a rate of interest set by the Bangladesh Bank.

The two state-run specialty banks claimed to have suffered huge losses between 2013-2014 and 2015-2016, as the BB repeatedly reduced the interest rate on loans. farm.

Subsequently, in April of this year, BKB claimed 1,388.91 crores from Tk in the form of an interest subsidy and Rakub Tk 119.63 crore from the Ministry of Finance.

The Ministry of Finance forwarded the proposals of both banks to the central bank for review.

In his December 11th response, the BB characterized the two banks' claim as absurd and illogical since the weighted average interest rate on loans dropped to 10.30% in 2016 against 13.61% in 2013.

Between 2013 and 2016, the weighted average interest rate on loan application, construction loan, transportation loan, consumer loan, and commercial and commercial loan declined significantly. This prompted the central bank to adjust the rate on agricultural loans accordingly, considering that the agricultural zone is a priority sector.

The BB reduced the interest rate on agricultural loans from 13% to 11% in January 2015 and 10% later in June 2016. The rate was further reduced in January of this year to 9%. %. All private and state-owned commercial banks disbursed agricultural loans in accordance with the central bank's agricultural and rural credit policy and program, and no one was allowed to receive such compensation, according to BB's letter.

In addition, the central bank provides different financial support each year to the two specialized banks, since they are dedicated to the disbursement of agricultural loans.

For example, BKB benefited from funds amounting to 1,000 crores Tk for the 2013-2014 fiscal year and the 2014-2015 fiscal year of the central bank as part of its plan of refinancing.

The central bank also grants loans at the request of about 300 crores TK to BKB each year so that it can disburse agricultural loans without interruption, indicated the letter BB


BB officials told the Daily Star yesterday that the Ministry of Finance had rejected the proposals of both banks following the central bank's opinion.

The two banks have long been grappling with classified loans and capital deficits as they operated businesses in violation of credit rules.

In September, the unproductive loans of BKB amounted to 4,316 crore Tk and 1,202 crore of Rakub & # 39; s Tk.

BKB faced a capital deficit of 7,540 crores of Tk at the end of September and 742 crores of Rakub Tk, according to the latest BB data. The central bank recently ordered BKB and RAKUB to make efforts to recover the classified loans, BB officials said.

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