Disbursement of agricultural loans dropped by nearly 10% year on year in the first month of the current FY25.
Bankers attribute this decline to the student-led movement, internet shutdowns, and curfews in July. They, however, believe that loan disbursement will gradually increase as the situation stabilized, according to the latest Bangladesh Bank (BB) report.
In July 2024, commercial banks disbursed agricultural and rural loans amounting to Tk1,790 crore against Tk1,991 crore disbursed during the same period of last year, the report also said.
According to central bank data, total agricultural loans currently stand at Tk56,894 crore, with non-performing loans (NPLs) amounting to Tk4,739 crore, or 8.33% of the total.
A year ago, total agricultural loans stood at Tk52,362 crore, with NPLs at Tk4,044 crore. This indicates that both loans and defaults have increased over the past year.
For FY25, commercial banks have been allocated Tk38,000 crore to disburse agricultural loans, 8.57% higher than the previous year's target of Tk35,000 crore.
Last FY24, banks disbursed Tk37,154 crore, which was Tk32,830 crore in FY23.
This year, state-owned and specialized banks are tasked with disbursing Tk12,615 crore, while private and foreign commercial banks have been allocated Tk25,385 crore.
In the first month of this fiscal year, state-owned banks disbursed Tk578 crore (4.58% of the target), while private and foreign banks disbursed Tk1,213 crore (4.78%).
The largest amount of loans was distributed by Bangladesh Krishi Bank, a specialized state-owned bank, which disbursed Tk284 crore, or 3.95% of its target.
In terms of loan repayments, farmers repaid Tk2,534 crore in the first month of the current fiscal year, compared to Tk2,710 crore during the same period of last year.
This marks a decrease of Tk176 crore, or 6.49%.
Agricultural loans are divided into two main categories: farm loans (e.g., livestock and fisheries) and non-farm loans.
In July, Tk734 crore was disbursed for crop production, Tk471 crore for poultry, and Tk323 crore for fisheries.
Additionally, Tk263 crore was disbursed in non-farm loans.
To meet the disbursement target, banks are allowed to use their own networks (branches, sub-branches, agent banking, contract farming, and group loans) and bank-MFI linkages.
This year, 60% of the total target must be disbursed for crops, 13% for fisheries, and 15% for livestock, according to central bank directives.