The farm loan disbursement by banks in July fell by 15.11 percent or Tk 175.97 crore year-on-year as at least 28 districts across the country were hit by floods triggered by heavy monsoon rains.
Disbursement of agriculture loan came down to Tk 977.15 crore in July of FY 20 from Tk 1,151.12 crore a year ago, according to the Bangladesh Bank’s (BB) latest statistics.
The recent floods damaged over six million people and submerged over 1 lakh hectares of cropland and thus slowed down the overall financing need for crops and farming.
Besides, banks also lagged behind in achieving target as they managed to attain 4.05 percent of their annual target in July this year whereas the entities achieved 5.08 per cent of their target in July last year.
Under the Agricultural and Rural Credit Policy and Program for the FY20, the central bank set Tk 24,124 crore as farm loan disbursement target for banks, up Tk 2,324 crore on Tk 21,800 crore of FY19.
The BB incorporated the agricultural credit policy with a view to increasing agricultural production and facilitating the farmers.
Banks issue agricultural credit facility for producing crops, purchasing irrigation and agricultural equipment, live-stocks and poultry firm, fisheries and storage and marketing of grains.
The central bank has also asked all the scheduled banks to suspend collection of farm loan installments from farmers in the flood-affected areas in the country.
Of the total disbursed amount of farm loans, state-owned commercial banks — Agrani, BASIC, BDBL, Krishi, Janata, RAKUB, Rupali and Sonali banks — distributed Tk 415.67 crore and the rest Tk 561.48 crore was disbursed by the private and foreign commercial banks.
With the disbursement in July this year, the amount of outstanding farm loans increased to Tk 42,596.13 crore including Tk 4,754.33 crore in classified loans.
Of the classified farm loans, state-owned banks hold Tk 4,446.30 crore or 14.08 percent of the outstanding farm loans of SOBs. The rest Tk 308.03 crore or 2.79 percent of the outstanding loans of the private and foreign banks have become defaulted.
As per the central bank’s farm loan policy, banks are supposed to disburse 2 percent of their total outstanding loans as farm loans. If a bank fails to meet the target, it has to keep 3 percent of the un-achieved target amount as reserve in the BB.
The BB will return to the bank the money if only it can later disburse the previous year’s undistributed amount.
The central bank, however, is set to meet with all the scheduled banks in the next week of this month for reviewing the latest situation on agriculture loan disbursement and recovery performances.