Staff Reporter :
In the fiscal year 2023–24, Bangladesh’s banking sector demonstrated commendable progress in agricultural financing, pivotal to the nation’s rural economy.
According to Bangladesh Bank, a total of Tk 30,104 crore has been disbursed in agricultural loans from July to April, achieving 86 percent of the targeted disbursement for the fiscal year. This marks a substantial effort towards bolstering the agricultural sector, which is crucial for sustainable economic growth and livelihood enhancement across the country.
Simultaneously, the recovery of agricultural loans during the same period amounted to Tk 28,949 crore, showcasing a robust 7.66 percent increase compared to the previous year. This uptick underscores the sector’s resilience and the effective management of credit facilities by financial institutions amidst evolving economic landscapes.
The overall disbursement target for FY24, set at Tk 35,000 crore across all 61 banks operating in Bangladesh, signifies a 13.6 percent escalation from the preceding fiscal year. This ambitious target reflects the collective commitment to fostering agricultural productivity through enhanced financial support.
As of April 2024, the outstanding balance of agricultural loans, inclusive of accrued interest, stood at Tk 56,487 crore, marking a notable 9.35 percent rise from the previous financial year. This growth underscores the sustained demand for agricultural credit and the sector’s expanding role in the economy.
Notably, overdue agricultural credit reached Tk 9,994.9 crore by April 2024, marking a 43.83 percent increase from the previous year. This highlights the challenges in credit recovery and underscores the need for continued diligence in loan management and borrower support mechanisms.
State-owned commercial banks and specialized banks targeted Tk 12,030 crore, while private banks and foreign commercial banks aimed for Tk 22,970 crore in agricultural loans for FY24. This division of targets underscores the collaborative efforts across different banking sectors to meet the diverse financing needs of the agricultural community.
In terms of allocation, the disbursed credit was predominantly directed towards the crop sub-sector, receiving 45 percent of the total, followed by livestock and poultry at 24 percent, fisheries at 15 percent, and other sectors including poverty alleviation, which collectively accounted for 16 percent. This strategic allocation reflects a balanced approach to addressing varied agricultural needs, ensuring comprehensive sectoral development.
Moreover, in April 2024, Grameen Bank and 10 prominent non-governmental organizations disbursed Tk 12,584.73 crore as microcredit, significantly contributing to rural micro-entrepreneurship and grassroots economic empowerment. The recovery of Tk 15,030.21 crore from microcredit further underscores its pivotal role in fostering inclusive economic growth and reducing poverty.
With agriculture playing a vital role in the country’s economy, issuing credit to farmers has become crucial for maintaining the agriculture-based rural economy, especially amid the ongoing global economic crisis. More than 40 percent of the country’s workforce is directly employed in the agriculture sector.
Farm loans enable farmers to invest in inputs such as seeds, fertilizers, and machinery, leading to increased productivity and economic growth. These 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 percent 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 channeled through NGOs, which charge interest rates ranging from 24 to 30 percent. To address the challenge of reaching remote areas, banks have allocated loan amounts to NGOs.
To encourage direct lending to farmers, Bangladesh Bank has instructed banks to disburse a minimum of 50 percent of their total disbursements through their own channels.
