Photo: Messenger
Bangladesh Bank's (BB) report has revealed that five banks have disbursed less than 5 percent of the targeted agricultural loans in the initial four months of the current fiscal year, with two banks demonstrating a complete failure in lending to the agricultural sector.
During this period (July–October), two banks, namely private-sector Citizen Bank and foreign-based Woori Bank, failed to disburse any loans to the agriculture and rural sectors. Additionally, three other banks—Padma Bank, Madhumati Bank, and Global Islami Bank—have disbursed less than 5 percent of their designated loans.
Padma Bank, with a target of Tk 58 crore, has only managed to disburse Tk 13,00,000 for agricultural and rural loans in four months. Similarly, Madhumati Bank, aiming for Tk 132 crore distribution, has only lent
Tk 3,51,00,000, accounting for merely 2.66 percent of the target. Global Islami Bank has disbursed 4.37 percent of its intended loans, amounting to Tk 12,40,00,000, against a target of Tk 284 crore.
Despite the government's initiative to provide low-interest loans and subsidies to bolster the agriculture sector for achieving food self-sufficiency, some banks seem reluctant to extend credit to farmers, despite directives from the central bank to ease loan conditions.
Bangladesh Bank has mandated a Tk 35,000 crore agricultural and rural loan target to banks for the current fiscal year to bolster food production. However, in the first four months, banks have disbursed Tk 11,960 crore, which is 34.17 percent of the target.
Government banks have contributed Tk 3,769 crore, foreign banks disbursed Tk 844 crore, and private sector banks lent Tk 7,345 crore towards agricultural and rural loans during this period.
Interestingly, foreign banks have been the most successful in meeting the targeted loans, disbursing 80.64 percent, while private banks achieved 33.51 percent, and public sector banks reached 31.33 percent of their respective targets.
A senior Bangladesh Bank official informed The Daily Messenger that emphasis has been placed on both the quality and quantity of agricultural loan disbursement. Special provisions have been made for banks without rural branches to distribute loans through small credit organizations or NGOs, ensuring wider outreach and accessibility in rural areas.
In this regard, the Micro Credit Regulatory Authority (MRA) has instructed to disburse agricultural loans through registered Micro Credit Institutions. In determining the interest, there are instructions that the MRA cannot charge more than the prescribed interest rate, he added.
Additionally, beyond the disbursement of agricultural loans, the repayment rate by farmers has been reported as satisfactory. The default rate among farmers in agricultural loans stands relatively low at 7.24 percent. By the end of October, out of the Tk 54,862 crore disbursed to farmers, only Tk 3,974 crore is in default.
Bankers have noted that farmers seldom engage in loan fraud. They might encounter difficulties due to natural calamities or other reasons, but unlike major industrial entities in the country, they generally do not default on loans. Banks remain actively involved in collecting smaller loans from farmers.
Data reveals that more than 74,000 cases have been filed by banks until July of this year for loan recovery, varying from Tk 5,000 to a maximum of Tk 100,000. In the initial four months of the 2023-24 financial year, Tk 10,948 crore has been recovered against loans disbursed to the agriculture sector. As of October, outstanding loans in this sector amounted to Tk 21,600 crore.
Bangladesh Krishi Bank (BKB) emerged as the leading lender in the first four months, disbursing agricultural loans totaling Tk 2,191 crore from July to October. Private sector Islami Bank secured the second position, disbursing loans worth Tk 980 crore.
Furthermore, Rajshahi Krishi Unnayan Bank (RAKAB) extended agricultural loans amounting to Tk 642 crore, followed by Dutch Bangla Bank with Tk 488 crore and IFIC Bank with Tk 473 crore. Among foreign banks, Standard Chartered Bank led in disbursing rural and agricultural loans, with an amount of Tk 541 crore.
Messenger/Disha
