The disbursement of agricultural credit and non-farm rural credit by all scheduled banks in the first nine months (July-March) of FY21 improved significantly as the demand for loan is picking up gradually due to seasonal effects, also implementing stimulus packages along with providing interest subsidy.
The disbursement stood at Tk18, 513 crore, representing an increase of 9.40 per cent from Tk16,922 crore in the corresponding nine months of FY20, according to central bank.
Owing to the same reasons, the recovery of agricultural credit and non-farm rural credit also increased by 16.71 per cent to Tk19, 775 crore in July-March of FY21, compared to Tk. 16,943 crore in the corresponding period of the previous fiscal year.
“Bangladesh Bank cut the interest rate at 8.0 per cent from the previous 9.0 per cent as part of its efforts to boost the agriculture sector amidst the ongoing economic slowdown caused by the COVID-19 pandemic,” said Bangladesh Bank's chief spokesperson Md. Serajul Islam.
The farm sector has faced difficulties due to the pandemic as the other sectors did. Banks will reduce the interest rate on farm loans so that the sector can secure funds at a lower cost, said the executive director of BB.
The central bank is considering trying to reduce interest rate in this regard, the official added.
The Agriculture Credit Department of the central bank has recently recommended bringing down the interest rate on farm loans based on the situation.
“The farmers of the country have set a unique example just when the big traders are seeking extra time to repay their loans during the pandemic, "said MD. Ali Hossain Prodhania, Managing Director of Bangladesh Krishi Bank.
In view of the overall situation of the second wave of Covid-19, the easing of down payment depends on the bank-client relationship, he added.
Accordingly, this will help farmers increase their production as well, he further said.
According to the central bank, in the first nine months of the current financial year (July-March), farmers have repaid loans worth Tk 19,774.89 crore. The collection has increased by Tk 2,831.73 crore over the same period last year. Earlier, in the fiscal year 2019-20 (July-March), 16,943.16 taka was collected.
According to the latest data from the central bank, in the first nine months of the current fiscal year 2020-21 (July-March), some banks have achieved 100 per cent of the annual target, but most banks have disbursed less than 50 per cent of the target. Of these, 11 banks are below 20 per cent.
However, all scheduled banks have achieved nearly 70.41 per cent of their annual agricultural loan disbursement target (Tk.26, 292 crore).
According to the updated data of Bangladesh Bank, the target for disbursement of loans in the banking sector is Tk 26,292 crore for the current financial year. Till March, the banks have disbursed loans of Tk 18513.31 crore.