The agriculture sector will continue to enjoy bailout facilities, including stimulus loans, as provided by the government last year to help it recover from losses, triggered by the pandemic and flooding.
As a result of such initiatives, farmers are now taking out loans as per their necessity, and also increased loan repayments with better agricultural production, according to the monthly report on Agricultural and Rural Financing, December 2020, published by the central bank on Wednesday.
Last year, the government announced a Tk5,000 crore stimulus package for the agriculture sector, except for those producing crops, to help farmers with working capital. The package's implementation time has been extended to 31 March this year.
On the other hand, on 14 April 2020, the government declared loans at a 4% interest rate for farmers producing crops.
At present, the lending rate is 9%. But farmers will repay at 4%. The government will subsidise the remaining 5%. This scheme is valid till 30 June this year.
Farmers in many parts of the country were affected by flash floods last year. To address their losses, on July 23 last year, the Bangladesh Bank directed banks to provide fresh loans to farmers. Until the situation improved, the agricultural loan recovery was suspended and conditions of down payment were relaxed too.
Towards the end of the same month, the central bank directed banks to offer facilities for opening accounts at Tk10 for farmers, sharecroppers and Jhum cultivators in the three hill districts and provide them with loans at 4% for producing pulses and spices.
The central bank report said although the agricultural sector's contribution to the gross domestic product (GDP) has declined, the sector is getting importance, in consideration of food security and labour participation in it.
The Bangladesh Bank is continuously providing policy directions to promote sustainable and inclusive economic growth and to expedite credit flow to all sub-sectors of agriculture and non-farm activities.
Agricultural production must be boosted up by raising productivity through channelling more credit as well as encouraging the use of the latest technology in both crop and non-crop sectors, which is also necessary to enhance the sustainable growth of the sector, the report said.
According to the report, the target for agriculture loan disbursement has increased by about 9% to Tk26,292 crore for the current fiscal year.
In the first six months (July-December) of the current fiscal year, disbursements amounted to over Tk12,000 crore, which was about 46% of the target.
During the period, farmers repaid more than Tk14,000 crore, which was 22.53% more than in the same period last fiscal year.