Classified loans in the agriculture sector increased significantly during the first seven months of this fiscal year (FY), from July to January, mainly due to lower recovery caused by floods and political unrest, officials said.
The amount of non-performing loans (NPLs) of farmers jumped nearly 42.50 per cent to Tk 61.79 billion during the July-January period of the current FY, 2024-25, from Tk 43.36 billion in the same period last year, according to the central bank's latest statistics.
"The volume of classified farm loans increased significantly during the period under review compared with the same period of the previous fiscal because of lower loan recovery," a senior official of the Bangladesh Bank (BB) told the FE on Monday.
The central bank, however, expects that the amount of NPLs in the agriculture sector would decline in the coming months following the Boro harvest.
Meanwhile, the share of NPLs in the total outstanding loans of the agriculture sector rose to 10.95 per cent in the first seven months of this fiscal, from 7.79 per cent in the same period of the FY 24.
The total outstanding loans in the sector stood at Tk 564.07 billion during the period under review against Tk 556.35 billion in the same period of the previous fiscal, the BB data showed.
During the period, the total amount of NPLs with eight public sector banks rose to Tk 54.05 billion, from Tk 38.04 billion in the same period of the FY 24.
The eight public lenders are - Sonali Bank, Janata Bank, Agrani Bank, Rupali Bank, BASIC Bank, Bangladesh Development Bank, Bangladesh Krishi Bank (BKB), and Rajshahi Krishi Unnayan Bank (RAKUB).
On the other hand, the total volume of classified loans with the private commercial banks (PCBs) and foreign commercial banks (FCBs) reached Tk 7.74 billion during the July-January period of the FY 25, from Tk 5.32 billion in the same period of the previous fiscal year.
Devastating floods in various parts of the country, coupled with political unrest, hindered the recovery of farm credit during the review period, according to a senior BKB official.
"Strengthening monitoring in line with the BB advices has also pushed up the volume of NPLs in the sector," he added.
The BKB official also said his bank has already taken initiatives to boost recovery drives for reducing the volume of NPLs in the agriculture sector.
Talking to the FE, Md. Ali Hossain Prodhania, a supernumerary professor at Bangladesh Institute of Bank Management (BIBM), said the banks should strengthen their close monitoring on farm loan recovery across the country.
"Farmers will repay their loans, if the banks run recovery drives properly," added Mr. Prodhania, also a former managing director of BKB.
On the other hand, farm credit disbursement dropped by over 9.00 per cent to Tk 192.15 billion during the period under review, from Tk 211.54 billion in the same period of the FY 24.
Of the Tk 192.15 billion, eight public banks disbursed Tk 80.93 billion, while the PCBs and FCBs disbursed the remaining Tk 111.22 billion.
The aggregate recovery of farm loans, however, stood at Tk 217.77 billion during the July-January period of the FY 25, from Tk 203.10 billion in the same period of the previous year.
Meanwhile, all the scheduled banks have achieved 50.57 per cent of their FY 25 agricultural loan disbursement target, fixed at Tk 380 billion. It was 60.44 per cent in the same period of the FY 24.
siddique.islam@gmail.com
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