The banks have failed to meet the agricultural loan disbursement target set for the fiscal year (FY) 2019-20.
This happened for the first time as Covid-19 walloped the economy in the last few months, the sector insiders said.
In FY20, the country's 59 banks disbursed Tk22,749 crore as farm and non-farm rural loan – meeting 94.30 percent of the target they set at the beginning of the year.
However, the banks set a total loan disbursement target of Tk24,124 crore for the FY20.
Bangladesh Krishi Bank Managing Director Ali Hossain Prodhania told The Business Standard: "During the general holidays, the banks provided some emergency services only. Even people did not go outside frequently. So the banks could not meet their agri-loan disbursement target."
"However, we – as a dedicated bank for the agriculture sector – achieved 112 percent of our loan disbursement target."
Also, the amount of the disbursed loan to the agriculture sector in FY20 was 3.67 percent lower compared to the previous fiscal year.
In FY19, all the banks disbursed Tk23,616 crore – 8.33 percent higher than the yearly target.
Former Bangladesh Bank executive director Shuvankar Saha, who worked at its agricultural credit department for a long time said, "From 2009-2010, the central bank has been setting agri-loan target regularly and the banks never missed the target. Even they exceed it by 5-6 percent every year."
At the start of every fiscal year, banks set agri-loan disbursement target in consultation with the central bank officials to boost the agricultural sector to keep the food supply stable.
Ali Hossain Prodhania said, "Now all the banks are disbursing loans under the stimulus package of Tk5,000 crore for the agriculture sector and the fund has to be used within September this year.
"So the pace of production in the sector might rise quickly."
Farmers can get a loan from the stimulus fund – initiated for recovery of the Covid-19 hit agricultural sector – at only 4 percent interest.
They also get a loan from another Tk3,000 crore refinance scheme of the Bangladesh Bank which is disbursed through the microfinance institutions.
In June – last month of FY20 – the banks disbursed Tk4,198 crore as agri-loan which was Tk1,132 crore in May 2020.
Also, in April this year, the banks disbursed only Tk496 crore. However, the figure reached Tk3,458 crore in March.
In FY20, the banks collected Tk21,245 crore from the previously disbursed agri-loan.
At the end of FY20, the banks' outstanding disbursed agri-loan stood at Tk45,593 crore.