'We pledged our financial support (to India) but we also spoke at great length about our knowledge partnership that we are going to build'

RAJSHAHI: Activities of Samabaya Bank in Rajshahi remained suspended for nearly 10 years. As a result, marginal farmers and small entrepreneurs are being trapped by the loan sanctioned at high interest rate by the NGOs.

Sources close to Samabaya Bank said the activities of Samabaya Bank were closed as the bank failed to repay a loan of Tk 55 lakh to the government. As a result, activities of 186 units of Samabaya Samity in various areas of the district remained stalled. At the same time, a substantial amount of money sanctioned to the field levels through various samabayas also remained unrealised for a long time.

Only in Godagari upazila there were 20 units of Samabaya Samity. Only two of these remained somehow active through the own initiatives of the members and others are now almost non-existent. Out of two active units, one is situated at Rishikul Union Bohumukhi Samabaya Samity Limited.

Years ago, farmers and small entrepreneurs used to get small agriculture and other small loans through these Samabaya Samities at a nominal interest rate. There was also no scope to becoming loan defaulter to any member because the loan was being sanctioned through forming co-operative societies.

As the activities of the Samabaya Bank remained closed for nearly 10 years, almost all the co-operative societies formed years ago no longer exist. As a result, farmers and small business entrepreneurs were drawing loan from various NGOs at an exorbitant, multiple interest rate and are turning paupers.

 Al-Arafah Islami Bank Limited organised a seminar on “Ramjan o Al-Quran (Ramadan and Al-Quran)” at the bank’s head office in Dhaka on Tuesday.

Md Habibur Rahman, Managing Director of the bank was present as chief guest, said a press release.

Dr. Hasan Mohammad Moinuddin, Assistant Professor of International Islamic University, Chittagong (Dhaka campus) was the main discussant.

Md. Mofazzal Hossain, Kazi Towhidul Alam, Md. Golam Rabbani and Mohammad Abdul Jalil, Deputy Managing Directors, top executives of the bank, among others, were present on the occasion.

The disbursement is Tk3,236 crore lower than Tk36,771 crore released in the first half of last year

StanChart analyses demand for loans in power sector

Over time, as Bangladesh moves up the income ladder, a larger part of the debt financing is likely to come from bank lending, as the country is likely to become less eligible for multilateral concessional debt, the bank said.

"We think banks could provide up to a maximum of 50 percent of project financing over the medium to long term. If we assume a 60 percent private-sector share over the medium term, this suggests that $40 billion of the additional investment required for power projects up to 2030 must come from private sources," it said.

On this basis, the analysis sees minimum potential for bank financing of power projects until 2030 at $10 billion and maximum potential at $20 billion.

Private commercial banks have already stepped in.

Recently, StanChart raised $190 million from international lenders for a 335-megawatt electricity plant of Summit Meghnaghat Power Company Ltd in a single largest funding for any private power company in the country. The British bank itself has contributed $40 million to the fund.

Investing in energy capacity is likely to have a positive effect on growth. The $60 billion of investment has the capacity to raise nominal GDP by $50 billion by 2030, the bank said. The analysis also pointed to the failure of timely implementation of the project.

Between 2010 and 2013, only 50 percent of planned electricity generation was added to the grid.

"Timely project implementation will be crucial for achieving the power generation targets. Inefficiencies in project implementation need to be resolved at the earliest."

The analysis also touched upon the coal issue.

According the government's energy master plan, coal's share of electricity generation should increase from 3 percent currently to 20 percent by 2020, 30 percent by 2025 and 50 percent by 2030.

The government has drafted several coal policies, but there is no consensus on the issue yet, depriving the country of tapping its vast reserves of high quality coal.

"Political will and consensus building will be required to push forward domestic coal extraction – not easy when the issue of food security in a high-inflation country is at stake," according to the analysis.

"However, given that energy security is a top government priority, we are optimistic that clarity on the national coal policy will be forthcoming sooner rather than later."

Electricity shortage has high economic costs. The World Bank estimates that load shedding represents a loss of 0.5 percent in GDP and a $1 billion loss in terms of industrial output a year.

There are also financial and environmental costs of owning generators to compensate for power outages, StanChart said.