Bangladesh central bank asks banks to help farmers

DHAKA (Reuters) - Bangladesh's central bank has asked banks to give fresh credit to farmers affected by last week's devastating cyclone, even if they have not paid back previous loans, to help them grow the next rice crop.

To be eligible for fresh credit, the farmers have to reschedule payments of arrears, a central bank circular said.

The Category 4 Cyclone Sidr hit the impoverished country's vast coastline with winds of 250 kph (155 mph) and a 5-metre high water surge from the Bay of Bengal on Thursday night, killing more than 3,100 people and destroying 600,000 tonnes of rice in the fields, according to preliminary estimates.

After massive floods in July-September, which washed away some 1 million tonnes of rice, the country's staple food, the central bank had set a target of nearly 77 billion taka ($1.12 billion) for credit disbursement among farmers across the country in the year to June 2008.

The central bank has asked banks to speed up the disbursement of loans after the floods.

"Measures have also been taken to ensure that the farmers receive fresh credit from banks within the shortest possible time without any hassles," the central bank said.

Cyclone Sidr, the deadliest storm to hit the country in one and a half decades, has also taken a heavy toll on livestock, fisheries, trees and vegetables in the country's south and southwestern coastal areas.

It has also hampered preparations for planting winter crops including wheat, potatoes and oil seeds.

Economists fear that the cyclone could help fuel inflation, already running at around an annual 10 percent, and will deal a fresh blow to the sluggish economy.

(Reporting by Ruma Paul; Writing by Anis Ahmed; Editing by Alan Raybould)