Agriculture loan disbursement declines

Muhammad Ayub Ali :

Unexpected flood and natural disasters has been severely affected the agricultural production this year. Farmers were waiting to overcome this loss during the Boro season with the assistance of the cheap loans from the bank.
But in the first half (first 6 months) of the 2024-25 fiscal year, agricultural and rural loan disbursements decreased by more than 11 percent, central bank data showed.
The impact of flash floods and waterlogging in Feni, Cumilla, and Noakhali in late August saw agriculture credit, a specific category of loans given to farmers.
The first three months of the current fiscal year witnessed floods in different parts of the country. Among them, Jamalpur was flooded in the first half of July, Feni, Cumilla, and Noakhali in late August, and the northern part of the country in late September. As a result, farmers could not fully grow their crop.
Md Habib Ullah, a farmer of the Noakhali district said to The New Nation, most of the banks are suffering shortage of money, they do not deliver deposited money to their customer, and how Banks give money to us with low interest.
Abdul Momen head of SME loan, Barc Bank said to the New Nation, still now agriculture loan depend on ancient process specially NGO based loan and influenced by the shares crops.
Only some big organizations are maintaining proper loans to the farmers he added.
If Bangladesh Bank enhances its refinancing to the commercial bank then agricultural loan disbursement will increase he suggested.
However, loan recovery increased by 7.5 percent during the same period.
The latest updated report of Bangladesh Bank says that the country’s banks have disbursed Tk 16,259 crore in loans to the agricultural sector in the first six months of the current fiscal year.
In the same period of the previous fiscal year, the amount of loans disbursed by commercial banks was Tk 18,326 crore.
Accordingly, loan disbursements in this sector have decreased by 11.27 percent in a year.
In the same period of the fiscal year (first 6 months), loan recovery in the agricultural sector has increased by 7.52 percent.
In the first half of the current fiscal year, commercial banks have recovered loans of Tk 19,117 crore, which was the amount recovered during the same period of the previous fiscal year.
Sector stakeholders say that the decrease in agricultural credit flow may have a negative impact on production during the Boro season.
This is because the need for credit has increased in the agricultural sector, which was affected by two floods in the latter half of 2024. On the contrary, bank loan disbursements have decreased during this period.
The report says that as of December 2024, the balance of agricultural loans disbursed in the country’s banking sector stood at Tk 56,180 crore. And in December 2023, this loan amount was Tk 55,395 crore. Accordingly, the loan has increased by Tk 623 crore compared to the previous fiscal year.