Despite the central bank's mandatory order, five foreign commercial banks, including the banking giant Hong Kong and Shanghai Banking Corporation (HSBC), have failed to disburse a single penny as farm credit in the first half of the current fiscal year.

“The banks providing no farm credit have already been served warning letters by an executive director,” a senior BB official told The Daily Star yesterday.

Those banks will have to show reasons why they have failed to comply with the BB directive on mandatory disbursement of farm credit, the official added.

BB data showed a disbursement of nearly Tk 134 crore by nine foreign banks operating here in six months up to December 2008. These banks are Standard Chartered (Tk 99.75 crore), Citi Bank NA (Tk 17 crore), Commercial Bank of Ceylon (Tk 14 crore) and National Bank of Pakistan (Tk 3 crore).

The banks that have disbursed no farm credit during the period are HSBC, Bank Al-Falah, Habib Bank, State Bank of India and Woori Bank.

However, these banks blamed their 'no presence' in rural areas for this dismal show.

“HSBC's limited presence significantly constraints its ability to reach the beneficiaries of the agricultural credit scheme,” said HSBC in a statement when it was contacted.

It added: “We are respectful to the central bank's instructions and will endeavour to comply with them.”

HSBC, which started business in Bangladesh in 1996, is one of the biggest foreign banks here, with 10 branches and 28 ATM booths.

Brushing aside the HSBC plea, another BB top official said, “The banks having no rural branch have been asked to lend to farmers in collaboration with other banks and NGOs located in villages.”

The official also hinted at punitive measures against the errant banks, including suspension of any branch expansion.

The central bank last year issued a circular asking all local private and foreign commercial banks to give a reasonable amount of their total loan portfolio as farm credit.

Historically, state-owned banks go for such lending.

The government, private sector and the donors all have emphasised raising farm productivity in the wake of a huge rise in the prices of agriculture products, especially food grains, in 2008.

Attaching importance to the agricultural sector, the new government a week after assuming power has halved the prices of non-urea fertiliser and Tk 2 per litre for diesel and kerosene.

Meanwhile, the BB is mulling setting a farm credit target for private and foreign commercial banks in order to boost farm output.

sajjad