Agriculture credit disbursement falls significantly

The impact of flash floods and waterlogging in Feni, Cumilla, and Noakhali in late August saw agriculture credit, a specific category of loans given to farmers, fall by over 14.39 percent in July-November of the current fiscal year compared to the previous year, reports UNB..
The first three months of the current fiscal year witnessed floods in different parts of the country. Among them, Jamalpur was flooded in the first half of July, Feni, Cumilla, and Noakhali in late August, and the northern part of the country in late September. As a result, farmers could not fully grow their crops.
This disrupted agricultural production and marketing, feeding into agricultural credit disbursement has also decreased due to the floods.
According to Bangladesh Bank (BB) data, agricultural credit distribution decreased by 14.39 per cent in the first five months of the current fiscal year.
Bankers say that in the last half of the just-expired 2024, all business activities, including banking, were greatly affected. This has also reduced the growth of credit in the banking sector. Due to this, agricultural credit distribution has decreased due to three consecutive floods in different parts of the country.
On the contrary, the amount of arrears has increased. They said that the growth of this credit would increase in the future.
According to the central bank data, a target of Tk 380 billion (38,000 crore) has been set for the country's agricultural sector in FY 2024-25. In the first five months (July-November), banks disbursed loans worth Tk 138.1 billion (13,810 crore). This is 34 per cent of the total annual target.
In the same period (first five months) of the last FY2023-24, the amount disbursed was Tk 152.8 billion (15,280 crore). That is, agricultural loan disbursement in the current fiscal year decreased by 14.39 per cent compared to the previous year.
According to BB, the status of agricultural loan disbursement stands at Tk 54,810 crore. Of this, Tk 16,700 crore has been collected, Tk 29,194 crore is outstanding and Tk 11,667 crore is overdue (not defaulted). Of the total loan, Tk 5,498 crore or 10 percent of the total loan disbursed has become defaulted.
The defaulted loan rate of agricultural loans is much lower than the overall default rate of the banking sector. Currently, the total loan in the banking sector is Tk 1,682,000 crore. Of this, Tk 284,977 crore, or about 17 percent of the total loans disbursed, have defaulted. Although the Governor of BB recently stated at a function that the default rate of the banking sector could exceed 30 percent.