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Farmer's access to finance is one of the major problems in rural areas. According to the Bangladesh Bank's agricultural loan and special programmes division, the target of distributing agriculture loan through state-owned commercial banks for this fiscal year has been fixed at Tk.7,779.23 crore. Getting finance at the grassroots level is still a big problem. The foremost issue is finding the right farmers and assessing them, which is beyond the scope of the bank's regular work, and is also very time consuming. Contract farming is one solution to these problems. Another solution is crop insurance. In conclusion, even without land collateral, banks can give loans to farmers if they have the will. And contract farming, if utilized properly, can be another way to arrange collateral and disburse loan to marginal, landless farmers and share- croppers.
Mahfuz, A., 2009. Agricultural Loan: The Loopholes in the System. The Daily Star, http://www.thedailystar.net/ (22 October 2009). |
