Interest rate on Rural Development Board loan likely to be halved
ANISUR RAHMAN KHAN
The government is considering a reduction in the interest rate of the loans given by the Bangladesh Rural Development Board (BRDB) to rural poor communities across the country.
According to sources, the authorities are planning to cut the interest rate by half.
At present, beneficiaries of Ekti Bari Ekti Khamar (EBEK or One House, One Farm) project need to pay only 8 per cent service charge for their loans, while the lenders of the BRDB have been paying around 16 per cent interest against their loans, sources said.
The interest rate of the BRDB loan has now been proposed to be fixed in such a way as to maintain parity with the rate (or service charge) of the EBEK project of the government.
According to the proposal of the Rural Development and Cooperatives Division (RDCD), which would be sent to Prime Minister Sheikh Hasina for her approval, the interest rate on the BRDB loan is proposed to be set at 8 per cent as in the EBEK project, thereby reducing it by 50 per cent.
Of the proposed 8 per cent interest rate, 5 per cent will be deposited in the BRDB account or the
organisations that implement the project to
maintain their service charges, while the remaining 3 per cent interest will be deposited in the accounts
of societies or samities, the RDCD proposal said.
The proposal further said that the deposited
funds would be spent for the benefit of the society or samity members.
The government is planning to reduce the interest rate of the BRDB loan, as the rate is too high for the poor community, RDCD secretary Proshanto Kumar Roy told The Independent yesterday.
Its not a target of the government to earn money by giving loans to the poor, he said.
The government gives the loans to the poor to make them financially independent by creating employment, he added.
The EBEK project has achieved success in giving low-interest loans, said Roy, who has also been a project director (PD) of EBEK. He further said more than one crore people from 22 lakh families have got benefits and attained solvency under the EBEK project.
According to Roy, they have created a fund of around Tk 2,800 crore, comprising the deposits of the beneficiaries. The government has provided the funds.
With the experience derived from EBEK, the RDCD is planning to reduce the BRDB interest rate. The beneficiaries will deposit their funds in their respective societies. At the same time, the government will give loans and bonuses to the beneficiaries and society members, just like the EBEK project, he said.
The RDCD is also planning to create a database of indigent people so that no one can derive
double benefits through overlapping, the RDCD secretary said, adding that it would help poor people create savings for themselves. It would also help the government reduce poverty by providing micro-credit facilities under the BRDB, he added.
At present, the BRDB is active in 443 upazilas under 64 districts. It provides various amounts of loans to their respective society members under separate projects. The credit recovery rate is around 87 per cent across the country.
