Agri loans in July 60% less than target

Agricultural loans disbursed in the first month of the ongoing fiscal year amounted to Tk942 crore, 60% less than the target, according to the Bangladesh Bank.

The government set a target to distribute Tk28,391 crore in loans in the agricultural sector in FY 2021-22.

Bangladesh Rural Development Board also disbursed Tk56 crore from its own fund for agriculture and other purposes in rural areas.

The BB data shows that eight state-run banks provided loans of Tk297 crore in the sector in July, far less than the target of Tk920 crore. Apart from that, private and foreign banks distributed Tk644 crore in loans whereas the target was Tk1,445 crore.

To boost up the agricultural production and protect the sector from Covid impacts, the government had aimed to distribute loans of more than Tk26,292 crore in FY 2020-21. But finally, the loan disbursement amounted to Tk25,511 crore.

The number of beneficiaries were 30,55,166 farmers. Of them, about 16 lakh female farmers received more than Tk9,000 crore.

Those involved in the sector said loan repayment in the agricultural sector was better than in other sectors, encouraging banks to provide credit for farming.

Since July is the first month of the financial year, loan distribution was less, they said, expressing the hope that it would increase in the coming months as farmers were applying for loans.

Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue, said agri loans depended on production seasons.

"The government is giving importance to the sector. There was a risk of production to be less than expected during the pandemic but the agricultural sector played an important role."

Mustafizur said the authority should make sure that the farmers who needed loans were benefited.

Commercialization and technology should get priority for a growth in production. "Moreover, more loans should be given to ensure diversification."

In a recent press release, the central bank declared that the interest rate of agri loans had been reduced to 8% from 9%.

In a meeting on 23 August, the BB decided to launch a new incentive package of Tk3,000 crore to help farmers cope with the Covid shocks. Farmers will get loans at a 4% interest rate under the package. And the scheduled banks will get funds from the package at an 1% interest rate.

In April last year, the central bank announced an incentive package of Tk5,000 crore for farmers, of which 92% have been disbursed.