Agricultural loan disbursement increased by 7% in the first eight months of FY21 compared to the same period of the previous financial year, but banks lag behind in meeting disbursement targets.
Between July and February of FY20, 62.56% (a little more than Tk15,000 crore) was disbursed against the target of Tk24,124 crore.
In the same period of this fiscal year, 61.54% (Tk16,180 crore) was disbursed against the target of Tk26,292 crore.
The figures were revealed in a monthly report of the Bangladesh Bank on agricultural and non-agricultural rural credit.
Md Serajul Islam, spokesperson and executive director of the central bank, said loans had not been disbursed as per the target due to various reasons, including the impacts of Covid-19 and floods.
But disbursement in the first eight months of the previous financial year was similar to that in the same period of FY21, he said.
"The trend indicates that the disbursement target will be met by the end of the financial year," he added.
Three state-owned banks – Bangladesh Krishi Bank, Rajshahi Krishi Unnayan Bank, and Sonali Bank – will disburse about 34.5% of the total target.
Bangladesh Krishi Bank's disbursement target for this fiscal year is Tk6,000 crore, Rajshahi Krishi Unnayan Bank's Tk1,850 crore, and Sonali Bank's Tk1,200 crore. In the first eight months, they disbursed 73%, 72.5%, and 60% respectively.
Between July and February, the highest amount of loan was disbursed for grain production, followed by livestock and poultry, and fish farming. The procurement of agricultural machinery saw the lowest disbursement.
Apart from agriculture, Tk1,100 crore was disbursed in various productive sectors to alleviate rural poverty.
Farmers borrowed more than before and the repayment situation was also better. They set a good example of repaying loans.
According to the central bank, repayment was about 13% higher between July and February compared to the same period of the previous fiscal year.
Serajul said farmers had been better able to repay than before as they had got good prices of post-flood paddy and other commodities.
In addition to the increase in loan disbursement and recovery, default loans in agriculture increased slightly in FY21. From July to February, such loans rose by Tk80 crore compared to the same period of the previous financial year.
A recent survey report on special agricultural loans distributed at 4% interest published by the central bank said farmers default if their crops are damaged by natural disasters or they do not get fair prices.