Global Journal of Management and Business Research, B: Economics and Commerce, Volume 21 Issue 5

Alauddin, Md. and Biswas, Joytirmay (2014) in their study recognize that a timely flow of agricultural credit can meet farmers demand to ensure agricultural productivity. Their study reveals that formal sector has flourished in recent years in disbursing agricultural credit where previously informal sector dominated the rural credit market for agriculture. Many local private commercial banks and foreign banks are using the channels of NGOs to provide agricultural credit as NGOs have a stronger network throughout the country. Islam, M.A., Islam, M.R. Sddiqui, M.H. and Karim, L. (2014) in their study found that farmers have lack of savings and scarcity of resources. So agricultural credit is a solution for the farmers to start their agro- farms and business. Availability of credit on time is important requirement for the rural people, particularly under conditions of scarcity of resources and uncertainty. Chowdhury D.T.A and Chowdhury, M.S.S. (2011) in their study analyzed the development of different services and facilities are provided by the specialized agricultural banks in Bangladesh for the overall improvement of agricultural sector. Their study reveals that both agricultural banks are able to achieve a steady growth in terms of employees, branches, deposits, loans and advances. Patwary, M.S.H. (2017) in a study found that agricultural credit plays an inevitable role in agricultural productivity, since it has increased the quantity and quality of inputs used in production process. Challenges faced by the farmers in getting agricultural credit: Long institutional procedure: The main problems faced by the farmers in getting agricultural credit are the long institutional procedure. It takes too time and formalities to process agricultural credit. As most of the small and marginal farmers have lack of knowledge about this formal procedure they always feel fear about formalities, documentation of financial institutions. A research work conducted by Ruhul Amin Sarkar (2006) revealed that 90 percent of all size farmers think that long institutional procedure is the major impediment in getting loans from institutional source. This lengthy procedure hampers the productivity of farmers. As farmers incapable to purchase agricultural inputs on time due to lack of cash. Urban bias of banking operation: In Bangladesh financial institutions are mostly urban biased. In many rural areas have a few or even no financial institutions. People in such areas have to cross long distance to reach financial institution and after fulfilling the requirement of financial institutions they get agricultural credit. For this reason farmers in rural areas are discouraged to get loan. So balanced sector wise development of financial institutions are needed. Lack of Collateral: Formal sector wants collateral as security of the credit that they disburse to the farmers. Formal sector also takes socio-economic status of a credit seeker into consideration when it decides to disburse agricultural credit. These make cheap formal credit accessibility more difficult for the marginal and sub- marginal and small farmers. This forces them to take loan from semi- formal institutional and non- institutional source. Higher non- interest cost of institutional credit: Alam (1981) identified four types of non-interest cost of institutional loan such as; (a) application fees, stamp, and documents required in support of loan; (b) from filling and writing, (c) Cost of traveling for loan negotiation; (d) Cost of entertaining people who assisted in loan negotiations. He observed that non- interest cost of borrowing falls as loan size increases. Higher non-interest cost of institutional credit for the small farmers acts as a hindrance to the development of productive force. Difficult credit rules: Most of the illiterate and partially educated farmers cannot understand difficult credit rules of banking institutions. For this reason, they try to collect loan from informal sector where there is simple rule for loan. It is also found that agricultural loan are often used for political motives. Farmers need political power to get loan. Weekly basis installment system: Most of the cases farmers who take loan from formal sources have to repay installment on weekly basis. As agricultural production takes time and income is received only after harvesting. So farmers who have no other sources of income, paying installment weekly becomes difficult for them. Discrimination in disbursing loan between male and female: There is discrimination in the allocation of loan between male and female. Per head disbursement of agricultural credit to male beneficiary is much higher than female beneficiary. III. I mpact of C aovid-19 on A gricultural S ector Covid-19 has an impact across all economic sector including the agricultural sector. Because of lockdown cost of production increases. During lockdown labour cannot move from place to place. As a result there arises labour shortage in agricultural sector. The shortage of labour increases labour wages. As agricultural production is labour intensive, so the rise in labour wages increase the cost of agricultural production. Farmers also face higher cost of transportation during lockdown. So it is easily understand that the cost of all agricultural inputs increases because of lockdown. The Covid-19 crisis will also reduce food demand as a result of declining incomes and lower frequency of visiting markets to maintain social distance. The negative impact is already Contribution of Banks on Agricultural Development in Bangladesh © 2021 Global Journals 74 Global Journal of Management and Business Research Volume XXI Issue V Version I Year 2021 ( ) B