Insurance industry lacks capacity for agricultural coverage: BB governor
Business Report :
Bangladesh Bank Governor Ahsan H Mansur has said the country’s existing insurance companies lack the capacity to operate agricultural insurance.
Speaking at a press conference on Tuesday, Mansur unveiled the new agricultural and rural credit policies and programmes.
All deputy governors, the head of the Bangladesh Financial Intelligence Unit, the chief economist, an executive director and chief executives of scheduled banks attended the event.
Bangladesh Bank (BB) has announced an agricultural and rural loan disbursement target of Tk 39,000 crore for the fiscal year 2025-26 (FY26), marking a 2.63 percent increase from last year’s Tk 38,000 crore target to boost agricultural productivity, curb inflation, and reduce poverty.
“I am not very enthusiastic about agricultural insurance, because our real insurance is not running,” the governor said during the briefing at the Jahangir Alam Conference Hall of the central bank’s head office.
“Agricultural insurance is risky and I don’t think our insurance companies will ever have the ability or capacity to manage it. I don’t see this possibility in the next 10 years. If they can, then most welcome, but I don’t see a future for it.”
He also emphases the importance of credit flow to the agricultural sector in achieving GDP growth, controlling inflation, and ensuring national food security.
“This increased target supports farmers and encourages greater investment in agriculture, ultimately aimed at sustainable development,” Dr. Mansur said. He added that agricultural credit aligns with several Sustainable Development Goals (SDGs), constitutional provisions, and banking regulations.
Out of the total target, Tk 13,880 crore has been allocated for state-owned commercial and specialized banks, while private and foreign commercial banks are expected to disburse Tk 25,120 crore.
To strengthen monitoring, BB also launched a Web-based Agri-Credit MIS Software at the event.
Furthermore, several policy updates were also announced including livestock credit target raised from 15 percent to 20 percent ,new 2 percent credit target set for irrigation and agricultural equipment.
Expanded crop list includes jackfruit, beetroot, cucumber, taro, black seed, ginger, garlic, turmeric (in bags), and molasses production.
CIB (Credit Information Bureau) reporting made mandatory for all agri-loans, but service charges waived for loans up to Tk 2.5 lakh.
Flexible credit limits: Banks may adjust agri-credit up to ±20per cent based on local demand.
Moreover, banks have been instructed to conduct awareness programmes and reward timely-paying borrowers.
Dr. Mansur stressed that timely credit supply is essential to poverty reduction, employment generation, and income growth in rural areas. He expressed optimism that the new measures will support macroeconomic stability while enhancing agricultural output and income for farmers.
Meanwhile, the recovery of agricultural credit by scheduled banks surpassed the total loan disbursement in the just-concluded financial year of 2024-25 amid the political changeover and floods.
