Foreign banks meet annual agri-loan disbursal targets in 8 months

Foreign banks operating in Bangladesh have fulfilled 100% of their annual agri-loan disbursement targets in the first eight months of the current fiscal year.

According to data from the Bangladesh Bank, eight foreign-owned banks were given a target to disburse a total of Tk771 crore in agri-loans in the fiscal 2022-23. But the lenders have disbursed around Tk774 crore between July 2022 and February this year, achieving their targets four months early.

A review of the agri-loan disbursement data in February shows that four foreign banks had achieved the target by the end of January. At the end of February, the number increased to seven. Standard Chartered Bank, with the highest disbursement target of Tk402 crore, has achieved 80% of the target, which is much higher than many state-owned and private banks.

According to the central bank's report, the number of banks that have achieved the target 100% has increased to 12 with the addition of three new foreign banks in February. On the contrary, there are 12 banks that could not distribute even 50% of the target, including two of them disbursing even less than 10% of their targets.

The loan disbursement target for the banking sector was set at Tk30,911 crore for the fiscal 2022-23. Of this, the country's banks have disbursed loans of Tk21,067 crore, or 68.15% of the target, during July-February.

Banks have disbursed Tk1,537 crore more in loans in the first eight months of the current fiscal year compared to the same period a year ago, but have lagged behind in target achievement. Banks managed to achieve 68.79% of their targets until February of last fiscal year, according to the report.

An agri-loan department official at a private bank said that there is a demand for agricultural loans from the end of October to February. This time is actually the peak season.

"Our main disbursements are made at this time. However, the banks, which are far from achieving the distribution target, are not able to achieve the target mainly because they do not have branches in rural areas. Besides, the operating cost to disburse these loans is also very high," he added.

Several senior central bank officials, who did not want to be identified, told TBS that banks that fail to distribute agricultural loans by the end of the fiscal year are punished. Earlier, these banks were fined.

A fund has now been formed. The banks have to deposit the remaining money of the target in this fund. Banks that are unable to disburse loans on time will have the remaining funds taken from them, and the loan will be disbursed through banks that are capable of disbursing loans, they added.

Usually, banks disburse agricultural loans through their main branches, agent banking, and non-governmental organisations (NGOs). Agri loans disbursed directly through banks have an interest rate of 8%, while NGOs are charging up to 24% interest. About 50-60% of agricultural credit disbursed by banks in the country is disbursed through NGOs.