Disbursement of farm credit soared to a record 11 percent in the first three months of the current fiscal year (FY22) showing a sign of strong recovery of the agricultural sector from Covid-19 pandemic that hit hard the agro production.
Banks disbursed Tk 5,210 crore in the first three months of FY22, said Bangladesh Bank sources.
Loan disbursement witnessed a rise as banks were now giving out funds to diversified arenas in the agriculture sector, said BB official.
"Bangladesh Bank gives special focus on agriculture as it is one of the main engines of the economy. We specially monitor agro credit disbursement because of ensuring food security," said BB's chief spokesperson Serajul Islam.
He said banks have already been asked to ensure proper disbursement of farm loan in line with the government's policy. Every bank must need to fulfil its disbursement target.
"It is a good sign that farm loan disbursement is on the rise as agriculture is still the lifeline of the economy. It is a priority sector of the government because stable farm production ensures food security of the country," said former governor of Bangladesh Bank economist DrAtiur Rahman.
Bangladesh Bank had the farm loan disbursement of Tk 28,391 crore for FY22, of which 18.35 per cent was given out between July and September.
The ratio was 17.82 per cent of the total disbursement target a year ago, said central bank data.
Many people have got involved in the farm sector in the recent times to make a living after losing jobs in the industrial sector, putting a positive impact on the disbursement of farm loans, said an official of Bangladesh Krishi Bank.
They are involved in the production process of poultry, fisheries and livestock under the farm sector, said the official. Against this backdrop, the demand for farm loan has been on the rise and the phenomenon may continue in the days to come, he added.
In addition, the recovery of farm loans has recently gained momentum, helping banks to reduce their defaulted loans in the sector efficiently. The banker said farmers were good clients and they repaid loans on time despite facing unexpected difficulties. Many farmers now cultivate different types of flowers and fruits, which were previously unusual, he said.
Banks are also showing eagerness in disbursing farm loans among them, sources said.
On top of that, lenders now try to disburse more loans in the farm sector as the repayment trend of the funds is better than that of the industrial sector.
So, disbursing loan to the farm sector is more secure than the industrial one, that is why banks gradually prefer the farmers, he said.
The BB official said the central bank imposed penalties on banks, which failed to fulfil their annual farm loans disbursement target.This has also had a positive impact on the disbursement.
Alongside, all private banks had recently improved their capacities for disbursing farm loans.The managements of the lenders have also beefed up monitoring on their farm loan disbursement programmes.
