Banks give 26,667C farm loans in Jul-Mar'FY24

Banks disbursed Tk26,667 crore in agricultural loans in July-March of FY24, accounting for 76.19% of the total disbursement target for FY24, according to Bangladesh Bank data.

The recovery amount of agricultural loans reached Tk25,410 crore in the nine months of FY24, which was 4.92% higher than that of the same period of the preceding year.

The disbursement target for agricultural credit in FY24 is Tk35,000 crore, an increase of 13.6% from the previous financial year’s target of Tk30,811 crore.

The outstanding balance, including interest, stood at Tk56,565 crore, marking a 10.31% increase from the previous financial year.

Overdue of agricultural credit stood at Tk10,175.78 crore at the end of March 2024, 44% higher than overdue of Tk7,066.54 crore at the end of March 2023.

State-owned commercial banks and specialized banks aimed to disburse Tk12,030 crore, while private banks and foreign commercial banks targeted to release Tk22,970 crore in farm loans in FY24.

Crop sub-sector received 45% of the disbursed credit, followed by live-stock and poultry 24%, fisheries 14%, others 11% and poverty alleviation 6%.

In March 2024, Grameen Bank and 10 large non-governmental organizations disbursed Tk16,914 crore as microcredit and recovered Tk15,700.55 crore.

More than 40% of the country’s workforce is directly employed in the agriculture sector.

Farm loans enable farmers to invest in inputs like seeds, fertilizers 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’s banks to disburse agricultural credit at a concessional interest rate of 4% for cultivating import substitute crops, including pulses, oilseeds, spices and maize.

In the 2022-23 financial year, farmers received Tk32,829 crore in loans and repaid Tk33,010 crore.

Most of these loans were channelled through NGOs, which charge interest rates ranging from 24% to 30%.

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% of their total disbursements through their own channels.