5 banks disburse less than 5% of agri loans in first 4 months of FY24

Five banks have fallen significantly short of their target in disbursing agriculture loans in the first four months of the current fiscal year (July-October), casting a shadow on the country's efforts to boost food production.

During this period, banks have disbursed Tk11,960 crore to farmers, accounting for 34.17% of the annual target. The central bank, in its effort to boost food production, had set a target of Tk35,000 crore for agricultural loan disbursement in the 2023-24 fiscal year, according to a report released by the Bangladesh Bank.

The report revealed that five banks have fallen significantly short, disbursing less than 5% of the target during this period. Notably, Citizens Bank and Woori Bank, a foreign bank, have completely failed to disburse any loans in the agriculture and rural sectors. Additionally, Padma Bank, Madhumati Bank, and Global Islami Bank have also struggled, disbursing less than 5% of the targeted amount.

Out of the total Tk11,960 crore disbursed in agriculture and rural loans, government banks contributed Tk3,769 crore, foreign banks provided Tk844 crore, and private sector banks disbursed Tk7,345 crore.

Foreign banks were the largest contributors, having disbursed 80.68% of their target of Tk1,046 crore. With 33.51% of Tk21,918 crore, private sector banks ranked second, followed by government banks with 31.33% of Tk12,030 crore.

Bankers emphasised that not only the quantity but also the quality of agriculture loan disbursement has been a focus. The Bangladesh Bank has directed banks lacking rural branches to collaborate with microfinance institutions or NGOs to ensure wider coverage, contributing to the overall positive trend in agriculture loan disbursement.

Despite concerns over disbursement levels, the report highlights the satisfactory repayment rates among farmers. The default rate in agriculture loans stands at a relatively low 7.24%.

A senior official from the Bangladesh Krishi Bank said, "Farmers seldom engage in loan fraud. They may face challenges, such as natural disasters, but they do not exhibit the tendency to default on loans seen among major industrial groups in the country."