Staff Reporter :
Bank’s loan recovery from agricultural credit increased by 8.21 percent year-on-year in the first half (July-December) of the current fiscal year of 2023-24 in stark contrast with rate of loan recovery from rich borrowers.
According to a recent report of the Bangladesh Bank, banks collected Tk17, 779 crore from agricultural loans in H1FY24, which was Tk16,429 crore in the same period of the previous fiscal year referring farmers are repaying more.
On the other hand, bank lending to the agriculture sector stood at Tk 18,326 crore in the first six months of FY24 indicated that the amount of bank’s agricultural loan disbursement and recovery going parallel.
Crop sub-sector received 44 per cent of the disbursed credit, followed by livestock and poultry 24per cent, fisheries 14 per cent, poverty alleviation7 per cent and other sectors 8 per cent.
The Bangladesh Bank has set a target for banks to disburse Tk 35,000 crore in agricultural loans in FY24. The disbursement target for the immediate past fiscal year 2022-23 was Tk 30,811 crore.
The farm loans enable farmers to invest in inputs like seeds, fertilisers and machinery, leading to increased productivity and economic growth.
Additionally, farm loans contribute to rural development by providing income opportunities and improving infrastructure, ultimately reducing poverty in rural areas.
Considering the increased demand of agricultural and rural credit, disbursement target for the state owned and specialized commercial banks is fixed at Tk 12,030 crore and for the private and foreign commercial banks is fixed at 22,970 crore taka.
According to the central bank data, during the first six months of FY24, state-owned banks distributed Tk 6,568 crore in agricultural loans, which is 54.60 per cent of their target for the entire fiscal year.
On the other hand, private foreign banks could achieve 52.36 per cent of their target by distributing Tk11,758 crore during the period of H1FY24.
However, 11 banks distributed less than 30 per cent of their target in the July-December period.
As of December 2023, the outstanding amount of agricultural loans (including interest) reached Tk55, 395 crore. However, in FY23, farmers received Tk32, 829 crore in loans and repaid Tk 33,010 crore.
Meanwhile, the banking sector’s defaulted loans soared 20.7 per cent year on year to Tk 145,633 crore in 2023.
Defaulted loans now account for 9 per cent of all outstanding loans, up from 8.16 per cent a year earlier, as per the latest data from the Bangladesh Bank.