Farm loan disbursement grows steadily

Agricultural loan disbursement has maintained a steady rise as it grew by 15.74 percent during July-October period of the current fiscal (FY2020-21) despite the Covid-19 pandemic, thanks to  active steps taken by the government to keep farm production unhurt.

During the same period, the disbursement of loan for cottage, micro, small and medium enterprise sector (CMSME) increased by 65.03 percent  as the government relaxed classification and provisioning rules for sector in an attempt to encourage banks to issue credit to the sector, according to Bangladesh Bank.

However, disbursement of non-farm rural credit decreased by 12.76 percent during the period.

Banks disbursed a total of Tk 7859.46 crore to both the farm and non-farm sectors.  

But a positive sign is that the recovery of agricultural credit and non-farm rural credit increased by 30.25percent and 5.58 percent respectively during the period.

"Bangladesh Bank has beefed up its supervision and monitoring to ensure disbursement of farm loan in line with the government's instruction . . . banks were asked to continue the disbursement of agricultural loan to ensure food production amid Covid-19 pandemic," said Bangladesh Bank's chief spokesperson Sirajul Islam.

In order to avert any shortage in food production due to Covid-19 pandemic Prime Minister Sheikh Hasina asked all concerned, including the agricultural and finance ministry to take all-out efforts to ensure the increase in farm production using every inch of arable land.

Sirajul Islam said a six-member monitoring team of the central bank is now overseeing the achievement of farm credit disbursement targets of the banks.

To increase farm production the BB earlier asked the banks to provide crop loans to farmers at 4.0 per cent interest rate, while the central bank will provide the rest 5.0 per cent as interest subsidy, he added.

Managing director of Bangladesh Krishi Bank (BKB) Md. Ali  Hossain Prodhania said, "The demand for agricultural loans will increase further in the coming months because the news of rolling out of the Covid-19 vaccine is revamping the activities in agricultural sector."

"We expect that the agricultural loan disbursement target will be crossed by the end of FY 21, if the banks take effective measures," he added.

He also mentioned that BKB is now monitoring the disbursement of farm loans along with implementation of the stimulus packages to achieve the target before ending the FY21.

According to the BB report, the general index of industrial production (medium and large scale manufacturing) increased by 9.29 percent and stood at 470.58 during the period. According to indices which increased during the period are: leather and related products increased by 69.49 percent, chemicals and chemical products by 54.40 percent, fabricated metal products except machinery by 49.52 percent, pharmaceuticals and medicinal chemical by 24.76percent, food products by 17.04percent, non-metallic mineral products by 10.55 percent and textile by 2.06 percent compared.

On the other hand, index of basic metals, tobacco products and wearing apparel decreased by 21.48 percent,11.22 percent and 0.35 percent respectively.