Bangladesh's central bank has ordered banks to take part in an agricultural loans programme aimed at ensuring food security following sharp rises in global prices, officials said on Monday. Commercial banks have to set a target for the amount of money they will loan to the sector based on their financial condition.
"We've asked all banks to provide farm loans keeping the present world-food crunch, rising demand and rocketing prices in consideration," a senior official at Bangladesh Bank, the central bank, said. The central bank has set a target of lending the farm sector at least 94 billion taka ($1.4 billion) in the 2008/09 fiscal year, 13 percent above the year-earlier target.
The loans help farmers to buy seeds and fertiliser and foot bills for irrigating their land. Bangladesh, which has a population of more than 140 million people, produces some 30 million tonnes of rice annually, but it often faces a scarcity due to natural calamities.
Nearly 2.5 percent of Bangladesh's annual budget goes on food imports on average, officials said. Agriculture generates 16 percent of the country's economic activity and is the principal source of employment.