SAJIBUR RAHMAN
Disbursement of agricultural loans has dropped by nearly 10 per cent year on year in the first month of the current fiscal year, according to the latest Bangladesh Bank (BB) report.
Bankers attribute this decline to disruptions in banking operations caused by student-led movement, internet shutdowns, and curfews in July. They, however, believe that loan disbursement will gradually increase as the situation stabilises.
In July 2024, the commercial banks disbursed agricultural and rural loans amounting to Tk 17.90 billion as against Tk 19.91 billion disbursed during the same period of last year, the BB report said.
According to BB data, total agricultural loans currently stand at Tk 568.94 billion, with non-performing loans (NPLs) amounting to Tk 47.39 billion, or 8.33 per cent of the total. A year ago, total agricultural loans stood at Tk 523.62 billion, with NPLs at Tk 40.44 billion. This indicates that both loans and defaults have increased over the past year.
A senior official at the central bank highlighted the importance of agriculture to Bangladesh's economy, noting that all governments should prioritise this sector.
He said the newly installed interim government has announced an agricultural policy and the central bank is reactivating various refinancing schemes. Additionally, steps are being taken to assist farmers affected by flooding, he added.
For 2024-25 fiscal year, commercial banks have been allocated Tk 380 billion to disburse in agricultural loans, 8.57 per cent higher than the previous year's target of Tk 350 billion. Last fiscal year, banks disbursed Tk 371.54 billion and the figure for the preceding year was Tk 328.30 billion.
This year, state-owned and specialised banks are tasked with disbursing Tk 126.15 billion, while private and foreign commercial banks have been allocated Tk 253.85 billion.
In the first month of this fiscal year, state-owned banks disbursed Tk 5.78 billion (4.58 per cent of the target), while private and foreign banks disbursed Tk 12.13 billion (4.78 per cent).
The largest amount of loans was distributed by Bangladesh Krishi Bank, a specialised state-owned bank, which disbursed Tk 2.84 billion, or 3.95 per cent of its target.
In terms of loan repayments, farmers repaid Tk 25.34 billion in the first month of the current fiscal year, compared to Tk 27.10 billion during the same period of last year. This marks a decrease of Tk 1.76 billion, or 6.49 per cent.
Agricultural loans are divided into two main categories: farm loans (e.g., livestock and fisheries) and non-farm loans. In July, Tk 7.34 billion was disbursed for crop production, Tk 4.71 billion for poultry, and Tk 3.23 billion for fisheries. Additionally, Tk 2.63 billion was disbursed in non-farm loans.
To meet the disbursement target, banks are allowed to use their own networks (branches, sub-branches, agent banking, contract farming, and group loans) and bank-MFI linkages.
This year, 60 per cent of the total target must be disbursed for crops, 13 per cent for fisheries, and 15 per cent for livestock, according to the BB directives.
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