Farmers close 35,816 bank accounts in 3 months

The number of farmers' bank accounts fell by 35,816 during January-March 2020 mainly because of the banks' lower priority to those accounts.

The figure of farmers' bank accounts dropped to 10,150,794 at the end of March this year from 10,186,605 three months ago, according to the Bangladesh Bank data.

Considering the 9,989,906 bank accounts of the farmers at the end of March 2019, the number of accounts rose by 160,888 in one year.

However, a Bangladesh Bank report released on Monday said 46,699 bank accounts of the farmers in Sonali Bank were closed during January-March 2020, leading to a fall in the account number.

When asked, Sonali Bank Managing Director Ataur Rahman Prodhan told The Business Standard: "Loan adjustments of the farmers and subsequent account closures could be the reason."

Ataur also said, "Sonali Bank has a Tk50 crore interest-free loan programme in progress which is meant for the farmers."

However, as part of the central bank's financial inclusion programme introduced in 2010, banks are supposed to open bank accounts of farmers with an initial deposit of Tk10.

The idea is to ensure transparent distribution of farm loans and subsidies and to bring farmers' savings into the banking channel. 

However, the central bank instruction barred banks from imposing any charge for maintaining these accounts. It made the banks reluctant to offer any incentive to the accountholders.

The Bangladesh Bank report shows that the deposit in the farmers' bank accounts rose by only Tk10 lakh during January-March.

With the increase, farmers' deposit in bank accounts reached only Tk351.86 crore.

Each of the farmers' account contains only a deposit of Tk346.63 on average which reflects their capacity to save.

However, the central bank earlier introduced a refinance scheme with a lower interest rate to make the Tk10 farmer accounts popular.

Also, the central bank issued a circular saying that the farmers having Tk10 accounts would get loans under its refinance scheme worth Tk200 crore at the interest rate of 9.5 percent.

According to the circular, the banks may impose a maximum 7 percent interest if they disburse loans under the scheme through microfinance institutions which will be allowed to charge the highest 9.5 percent interest on the loans.

However, the initiative failed to get momentum.

And the loan disbursement to the farmers at the end of March 2020 dropped to Tk135.22 crore from Tk142.85 crore three months ago.