Bangladesh Bank on Tuesday instructed private banks to expedite their farm loan disbursements to enhance domestic food security.
Lenders have been asked to give out 30% more loans instead of sticking to the annual disbursement target set by the central bank.
Bangladesh Bank set a loan disbursement target of Tk30,911 crore for this fiscal year FY23.
Of the target, banks disbursed 31% between July and October, showed data from the central bank.
However, the trend of farm loan disbursement has not reached a satisfactory level yet given the agriculture sector's contribution to the GDP.
Bangladesh Bank formed a Tk5,000 crore refinance scheme last week to ensure food security in the country as the banking regulator thinks the world might face a food crisis in the days to come.
The prices of several food items have gone up in the global market, which is why the central bank has formed a fund such that farmers can get low-cost loans.
Under the scheme, farmers will be able to take loans at 4% interest.
As per the central bank policy, private banks are allowed to attain 70% of their annual farm loan disbursement target through microfinance institutions (MFIs).
Farmers can avail farm loans at 9% interest from banks but the rate increases to as much as 25% if they take it from MFIs.
Many private banks usually disburse the majority of their farm loans through MFIs as they do not have branches available in rural areas.
