Agricultural loan disbursements increased 11% year-on-year to Tk 5,210 crore in the first three months of this fiscal year, with banks now distributing funds to diverse areas of the agricultural sector.
Many people have recently become involved in the agricultural sector to make a living by losing jobs in the industrial sector, which has a positive impact on the disbursement of agricultural loans, said the managing directors of different banks.
The Bangladesh Bank has set an agricultural loan disbursement target of Tk 28,391 crore for the 2021-2022 fiscal year, of which 18.35% was granted between July and September.
The ratio was 17.82 percent of the total disbursement target a year ago. Shirin Akhter, managing director of Bangladesh Krishi Bank, said large numbers of people have entered the agricultural sector as they found themselves unemployed in the fallout from the pandemic.
They are involved in the process of poultry production, fisheries and animal husbandry in the agricultural sector, she said.
In this context, the demand for agricultural loans is on the rise and the phenomenon could continue in the days to come, she said.
In addition, the recovery in agricultural lending has recently gained momentum, helping banks effectively reduce their delinquent loans in the sector, she said.
Non-performing loans in the agricultural sector stood at Tk 4,057 crore in September this year, up from 17 percent year-on-year.
Akhter said the farmers are mostly good clients and repay their loans on time despite unexpected difficulties.
Emranul Huq, managing director of Dhaka Bank, echoed her, saying that the diversification of farms has had a good effect on the disbursement of agricultural loans.
Many farmers now grow different types of flowers and fruits, which was previously unusual, he said.
Banks are also showing a willingness to disburse agricultural loans among them, Huq said.
In addition to this, the lenders are now trying to disburse more loans in the agricultural sector because the repayment trend of the funds is better than that of the industrial sector.
“We have to give a large amount of loans to an industrial customer. If the borrower defaults, the whole bank will face dire consequences,” he said.
Thus, the disbursement of loans to the agricultural sector is more secure than to the industry, which is why banks gradually prefer farmers, Huq said.
Mohammad Shams-Ul Islam, managing director of Agrani Bank, said the central bank had imposed sanctions on banks that failed to meet their annual target for disbursing agricultural loans.
It also had a positive impact on disbursement.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said private banks have recently improved their capacity for disbursing agricultural loans.
Lender departments have also strengthened the monitoring of their agricultural loan disbursement programs.