The Bangladesh Bank set the farm credit disbursement target for the current fiscal year at Tk24,124 crore or 10.66% up from previous fiscal year
Farm credit in the first seven months of the current fiscal year failed to go by the yearly target by above two percentage point, as banking sector lent only Tk13,104.27 crore during the period, up by only 8.29%.
The Bangladesh Bank set the farm credit disbursement target for the current fiscal year at Tk24,124 crore or 10.66% up from previous fiscal year.
Loan disbursement to the sector rose by Tk1,003.23 crore, up from Tk12,101.04 crore in the same period of 2018-19 fiscal year, according to the Bangladesh Bank data.
The disbursed volume amounted to 54.32% of the target set for the 2019-20 fiscal year. The central bank has set the target at Tk24,124 crore.
Talking to Dhaka Tribune, Md Habibur Rahman, general manager of agricultural credit department of Bangladesh Bank, said: “Agricultural is a priority-based sector. So, the banks lend to the agriculture sector on a priority basis as per the central bank instruction.”
This, he added, increased lending to the agriculture sector despite slow credit growth.
Private sector credit growth dropped to a nine-year low of 9.87% in November of last year, according to the central bank data.
“We are monitoring the scheduled banks regularly over lending to the farm sector,” said Md Habibur Rahman.
During July to January of the current fiscal, the state-run banks disbursed Tk6,253.71 crore, which is 60.28% of the target. The private and foreign banks disbursed Tk6,850.56 crore, or 49.83% of the target for the current fiscal, according to data.
An increased flow of agricultural loans could give a major boost to the overall economic development of the country, says a study by the Bangladesh Institute of Bank Management (BIBM).
As agriculture is a labor-intensive sector, its increased accessibility to long-term finance can make substantial contribution to the gross domestic product (GDP) of the country, it observes.
If banks and other non-banking financial institutions invest more in the agriculture sector, more people could be employed. This will help reduce the poverty rate and develop the rural economy, says the study.