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Farm loan release rate slows in July-February


In July-February of FY20, farm loan disbursement by the banks was Tk 15,092.17 crore against their target of Tk 24,124 crore for the entire fiscal year. COURTESY

  • BUSINESS
  • Staff Correspondent
  • Published: 20 Mar 2021, 11:31 AM

The rate of farm loan disbursement against the Bangladesh Bank-set target in the July-February period of the current fiscal year 2020-2021 was lower than the rate in the same period of the previous fiscal year. According to BB data, farm loan disbursement by state-owned commercial banks, specialised banks and private commercial banks reached 61.54 percent of the annual target in the eight months of FY21. 

In July-February of FY20, disbursement by the banks was 62.56 percent against the target set by the BB for the fiscal year. The BB data showed that disbursement of farm loans by the banks stood at Tk 16,180.22 crore in the eight months of FY21 against their disbursement target of Tk 26,292 crore for the entire fiscal year.

In July-February of FY20, farm loan disbursement by the banks was Tk 15,092.17 crore against their target of Tk 24,124 crore for the entire fiscal year.

In FY20, the banks for the first time missed the farm loan disbursement target amid the COVID-19 outbreak.  BB officials said that the central bank was keeping a close eye on credit issuance by the banks to farmers so that disbursement would not fall short of its target in FY21.

Though the farm loan disbursement rate was lower in July-February of FY21, the volume of disbursement was Tk 1,088.64 crore higher in the period against disbursement reported in the same period of FY20.

Apart from the farm loan disbursement, the banks disbursed another Tk 3,385.1 crore under the BB’s refinance scheme and the Bangladesh Rural Development Board issued Tk 728.77 crore in agricultural and rural credit from its own fund. 

As agriculture plays a crucial role in the economy, issuing credit to farmers has become vital to keeping the agriculture-based rural economy vibrant at a time when the industry and service sectors are struggling to recover from the adverse impacts of the coronavirus outbreak, BB officials said. 

As much as 40.6 percent of the country’s workforce is directly employed in the agriculture sector. As floods hit farmlands across the country in June 2020, the central bank directed the banks to increase the disbursement of farm loans.

As part of the measures taken amid the flooding, the central bank asked the banks to ensure hassle-free and speedy assess to loans for the flood-hit famers. The instruction issued on July 23, 2020 asked the banks to issue credit facilities to the farmers so that they could start income-generating activities, such as poultry and cattle farming and feed production. 

The banks were also directed to reduce dependency on microfinance institutions in releasing the farm loans as the method costs the farmers more than 20 percent in interest.


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