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Sunday | January 18, 2026 | Dhaka

Agri lending shifts toward livestock, fisheries despite default worries

Scheduled banks disbursed Tk 2,672 crore in agricultural loans in August a 28 percent increase from the same month last year

Business Report :

Agricultural loan disbursement in Bangladesh rose sharply in August, but a surge in unpaid loans has raised concerns about the stability of the country’s rural credit system, according to the latest Bangladesh Bank report.

Scheduled banks disbursed Tk 2,672 crore in agricultural loans in August a 28 percent increase from the same month last year. The lending is part of the government’s annual target of Tk 39,000 crore for the 2025–26 fiscal year, up 2.6 percent from the previous year.

However, the report shows a worrying trend in defaults. Overdue agricultural loans jumped to Tk 22,968 crore by the end of August, almost double the Tk 11,844 crore recorded a year earlier a 94 percent rise. Total outstanding agricultural credit, including interest, reached Tk 59,541 crore, up 6.6 percent year-on-year.

Banking officials attribute part of the increase to new loan classification rules introduced in April, but economists warn that deeper structural problems such as weak credit assessment, political interference, and poor recovery systems are driving the problem.

While loans for livestock, poultry, and fisheries have grown, lending for crop production and poverty alleviation has fallen, signaling a gradual shift in agricultural finance. Experts say this diversification is promising but also risky, as recovery systems in these newer sectors are still weak.

In August, banks recovered Tk 3,120 crore, about 8 percent higher than a year earlier, but repayments continue to lag behind disbursements, widening the debt gap.Microfinance institutions are also struggling.

Grameen Bank and ten major NGOs disbursed Tk 16,568 crore, up 46 percent from last year, but their overdue loans rose 24 percent to Tk 8,212 crore. In contrast, the Palli Karma-Sahayak Foundation (PKSF) managed to cut overdue loans by 35 percent through stronger credit monitoring and recovery.

The Bangladesh Bank report warned that “enhanced monitoring, prudent lending, and effective recovery mechanisms” are essential to contain risks and sustain growth in the rural credit sector.

Economists say the rising defaults threaten the progress made in agricultural financing a sector crucial for employment, food security, and poverty reduction in Bangladesh.