43pc farm credit disbursed so far

Agricultural loan disbursement witnessed a significant increase this July-November period compared to the matching period of fiscal year (FY) 2022-23.
According to data available with the central bank, the disbursement target for FY24 stands at Tk 350 billion with 43.66 per cent achieved in the first five months.
The payment of farm loans by scheduled banks in November also saw a modest hike than in October 2023.
Agriculture and rural credit in July-November compared to the corresponding period in FY23 rose by 19.55 per cent to Tk 152.80 billion from Tk 127.77 billion.
According to the Bangladesh Bank data, scheduled banks disbursed a total of Tk 33.19 billion this November, indicating a modest increase of 5.87 per cent.
When compared, the disbursement for such loans was Tk 31.35 billion in October.
By November, the outstanding balance with interest of farm credit reached Tk 545.90 billion, marking a spike of 8.74 per cent than the same period in the preceding fiscal year.
On the other hand, the total credit recovery was recorded at Tk 144.18 billion in July-November 2023, which was 12.01 per cent higher than the same period of last fiscal.
Policy Exchange of Bangladesh chairman and CEO Dr M Masrur Reaz expressed satisfaction with the increased distribution of farm loans by banks.
But he emphasised the crucial need to maximise domestic production for the sake of safeguarding the country's food security for a population exceeding 170 million.
According to Dr Reaz, maintaining uninterrupted food supply and agricultural production is vital as he underscored the importance of farm loans in achieving that goal.
The economist also highlighted the need for normalcy in the supply of agri inputs, urging the central bank to ensure continuous import of essentials such as seed, chemical and pesticide.
He recommended a careful examination of the borrowers to ensure that the financial support reaches the right recipients to maximise its impact on agricultural productivity and overall food security.
On 22 May 2022, the BB asked banks to disburse farm credit at a concessional interest rate of 4.0 per cent, especially for cultivating import-substitute crops.
These crops include pulses, oilseed, spices and maize.
Farmers availed loans amounting to Tk 328.29 billion in FY23. Their repayments totalled Tk 330.10 billion.
The majority of these loans were facilitated through non-governmental organisations (NGOs).
Farmers accessed loans from banks at a lending rate of 8.0 per cent, whereas loans acquired through NGOs carried higher rates ranging from 24 to 30 per cent.
Due to inherent challenges faced by banks in directly reaching farmers at grass-roots level, they channel loan disbursements through NGOs, which, in turn, disburse the funds at elevated interest rates.
To provide farmers with loans at more favourable rates, the regulator has instructed banks to disburse a minimum of 50 per cent of their total loan disbursements through their channels.

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