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  • Farm loan recovery climb amid pandemic

Farm loan recovery climb amid pandemic


  • BUSINESS
  • Staff Correspondent
  • Published: 20 Feb 2021, 12:53 PM

When large borrowers are grumbling about the withdrawal of loan moratorium facility, farmers have been dutifully servicing their credit despite having the option not to pay.

In the first seven months of fiscal 2020-21, lenders recovered at Tk 16,056.2 crore from farmers, up about 18.7 per cent from a year earlier, according to the data from the Bangladesh Bank.

The eight state-run banks account for 43.2 per cent of the sum, with private and foreign banks recovered the rest. “It is a positive sign,” said Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank.

The state-run specialised bank recovered Tk 4,264.3 crore during the period -- the highest. “The increasing trend of farm loan recovery amid the loans moratorium facility once again proves that small and medium farmers have good repayment behaviour.”

The central bank had offered a moratorium on instalments of loan repayments from January to December of last year to give some breathing space to the borrowers amid the pandemic.  “We did not put pressure on the farmers amid the pandemic but they repaid their loans voluntarily,” Prodhania added.

After BKB, Rajshahi Krishi Unnayan Bank recovered the most loans: Tk 1,466.9 crore. Sonali Bank recovered at Tk 546.8 crore, Agrani Tk 210 crore, Janata Tk 276.4 crore, Rupali Tk 126.1 crore, BASIC Tk 40.7 crore and Bangladesh Development Bank Tk 6.2 crore during the July-January period.

The central bank has set the interest rate at 4 per cent for farm loans owing to the economic fallout from the global coronavirus pandemic, said a top BB official. 

Besides, the government has introduced a Tk 5,000 crore stimulus fund for farmers, which gave a boost to them and encouraged them to repay the loans despite the moratorium facility, he added. 

During the period, the banks disbursed Tk 14,148.7 crore to farmers, which was 53.8 per cent of the total disbursement target for fiscal 2020-21, BB data said.

BKB, the country’s largest agri-based bank, disbursed the highest amount of loans in the first seven months of the fiscal year: about Tk 3,751 crore, which is 62.5 per cent of its target. 

“We will be able to fulfil this year’s target,” Prodhania said, adding that the bank already completed the disbursement process of stimulus fund for the sector.

Alongside the regular farm loan disbursement process, as many as 43 banks are implementing the Tk 5,000 crore rescue package announced by the government on April 13 last year for the agriculture sector.

The tenure for the loans was set at 18 months, including a grace period of six months.Banks will borrow the funds at 1 per cent interest rate and lend at 4 per cent to farmers in line with the BB guidelines. As of 2020, the 43 lenders had disbursed at Tk 3,350.8 crore among 143,747 farmers, according to the data from the central bank. The lenders will have to complete the agri-stimulus disbursement process within March 31.


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