Banks asked to lend more to farm, SMEs

Banks should change their conservative attitude towards financing the agriculture sector and small and medium enterprises (SMEs) to help generate employment and boost internal demand to offset the impacts of the global recession, the central bank governor said yesterday.“Banks should open their purses to support farm and small non-farm sectors to turn the masses into potential consumers,” Dr Atiur Rahman told reporters after his maiden meeting with the chief executive officers (CEOs) of 48 banks operating in the country.Rahman said majority of the people who live in the rural areas still remain out of the reach of bank services.The Bangladesh Bank (BB) governor said banks' deposits in rural areas are declining constantly. Banks also channel rural deposits into urban areas, he added.“Banks, especially the private ones, should open more branches in rural areas to fund the potential businesses, including of agriculture,” said the governor.Currently, a bank has to open one branch in rural areas against every four in urban, according to central bank regulation. But many banks open branches in upazila, pourashava (municipality) and district areas and brand those as rural branches.Rahman has given the highest priority on ensuring the country's macroeconomic stability.The governor told the bankers that BB would also try to undertake some new pro-poor projects and strengthen implementation of the existing ones, such as women entrepreneurs' and SME refinance schemes.He said the Credit Information Bureau of BB is being automated faster to render quicker services.He also assured the bankers of taking all decisions in consultation with the stakeholders.Mahmood Sattar, chairman of Association of Bankers Bangladesh, a forum of the banks' CEOs, told the reporters after the meeting that the governor has given them a 'philosophical roadmap' on how he wants the banking sector should run.He said they would try to add the huge unbanked population to the banking network.