Overdue farm credit rises 10.75pc by April-end

The overdue agricultural credit stood at Tk 69.5 billion at the end of April 2023, up by 10.75 per cent from Tk 62.74 billion at the end of April 2022.
The overdue agricultural credit, as a percentage of outstanding balance was 13.45 at the end of April 2023 and 12.74 at the end of April 2022, according to Bangladesh Bank data.
However, the outstanding balance of agricultural credit increased by nearly 5.0 per cent to nearly Tk 24 billion in a year to April last, according to the data.
The data said that at the end of April 2023, the outstanding balance of agricultural credit including interest stood at Tk 516.6 billion.
Such overdue agricultural loans weaken the financial health of banks. As a result, they face trouble with rolling out fresh loans.
Bankers told the FE that the main reason for the rise in overdue agricultural loans was a lack of supervision as banks overlook such tiny loans.
Loss of crop yield or any natural disaster affects the growers to a great extent leaving them in trouble to repay the monthly instalment, they said.
There are also wilful defaulters but their percentage is lower, they mentioned.
The private commercial banks have the highest share of agricultural credit lent to the farmers and farms.
They have 56 per cent share of the credit followed by state-owned specialised banks with 33.3 per cent.
Bangladesh Rural Development Board (BRDB), Bangladesh Shomobay Bank Limited (BSBL), Palli Karma Shahayak Foundation, Microcredit Operations by Grameen Bank and other large NGOs also disburse loans to the farmers.
Commercial banks can disburse directly upto 30 per cent while the rest of the amount is disbursed by micro credit financial institutions where the rate of interest is over 20 per cent.
On the contrary, the rate of interest for loans from commercial banks lent directly is around 8.0 per cent.
However, the agricultural credit disbursement target was fixed at Tk 309.11 billion for FY23, which was 8.88 per cent higher than Tk 283.91 billion targeted in FY22.
During July-April 2023, disbursement of agriculture credit stood at Tk 269.3 billion or up by 87.12 per cent of the total disbursement target of FY23.
In April 2023, actual credit disbursement stood at Tk 28.07 billion or 24.62 per cent higher than that of the same month of the preceding year.
In April 2023, Grameen Bank and ten large NGOs disbursed Tk 126.08 billion as microcredit and recovered Tk 139.07 billion.
jasimharoon@yahoo.com