Banks disbursed Tk 9,391 crore in agricultural loans in July-October of the 2024-25 financial year, which accounts for 24.71 per cent of the total disbursement target for FY25, according to Bangladesh Bank data.
The recovery amount of agricultural loans reached Tk 28,949 crore in the 4 months of FY24, which was 14.9 per cent higher than that of the same period of the preceding year.
The disbursement target for agricultural credit in FY25 was Tk 38,000 crore, an increase of 8.75 per cent from the previous financial year鈥檚 target of Tk 35,000 crore.
The outstanding balance, including interest, stood at Tk 55,084 crore in July-October, marking a 0.4-per cent increase from the previous financial year.
Overdue of agricultural credit stood at Tk 11,931 crore at the end of October 2024, which is 40 per cent higher than the overdue of Tk 8521 crore at the end of October 2023.
With the increased demand for farm loans, the BB set the target for state-owned commercial and specialised banks at Tk 12,615 crore and for private and foreign banks at Tk 25,385 crore, the officials said.
Additionally, 60 per cent of the total target must be allocated to crops and grains, 13 per cent to fisheries and 15 per cent to livestock.
The central bank set the farm loan release target to increase agricultural production to control inflationary pressures and achieve gross domestic product growth target.
More than 40 per cent of the country鈥檚 workforce is directly employed in the agriculture sector.
Farm loans enable farmers to invest in inputs like seeds, fertilisers and machinery, leading to increased productivity and economic growth.
Farm loans also contribute to rural development by providing income opportunities and improving infrastructure in rural areas.
On May 22, 2022, the central bank instructed the country鈥檚 banks to disburse agricultural credit at a concessional interest rate of 4 per cent for cultivating import substitute crops, including pulses, oilseeds, spices and maize.
In FY23, farmers received Tk 32,829 crore in loans and repaid Tk 33,010 crore.
Most of these loans were channelled through NGOs, which charge interest rates ranging from 24 to 30 per cent.
To address the challenge of reaching remote areas, banks allocated loan amounts to NGOs.
To encourage direct lending to farmers, the Bangladesh Bank has instructed banks to disburse a minimum of 50 per cent of their total disbursements through their own channels.
Banks disbursed Tk 37,154 crore in agricultural and rural loans in the past financial year, surpassing the target of Tk 35,000 crore by 106.15 per cent compared with Tk 32,830 crore disbursed in the previous financial year.
