Farm loan disbursement rises in Jul-Sep
Farm loan disbursement grew 11 per cent year-on-year to Tk 5,210 crore in the first three months of this fiscal year as banks are now giving out funds to diversified arenas in the agriculture sector.
Many people have got involved in the farm sector in recent times to make a living on losing jobs in the industrial sector, putting a positive impact on the disbursement of farm loans, said managing directors of different banks.
Bangladesh Bank set a farm loan disbursement target of Tk 28,391 crore for fiscal 2021-22, 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. Shirin Akhter, managing director of Bangladesh Krishi Bank, said a large number of people had become engaged in the farm sector on becoming unemployed in the fallouts of the pandemic.
They are involved in the production process of poultry, fisheries and livestock under the farm sector, she said.
Against this backdrop, the demand for farm loans has been on the rise and the phenomenon may continue in the days to come, she said.
In addition, the recovery of farm loans has recently gained momentum, helping banks to reduce their defaulted loans in the sector efficiently, she said.
Non-performing loans in the agriculture sector stood at Tk 4,057 crore as of September this year, down from 17 per cent year-on-year.
Akhter said farmers were chiefly good clients and they repaid loans on time despite facing unexpected difficulties.
Emranul Huq, managing director of Dhaka Bank, echoed her, saying that diversification in farms has had a good effect on the agriculture loan disbursement.
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, Huq 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.
"We have to give out a large amount of loans to a client in the industrial sector. If the borrower becomes defaulter, the entire bank will face dire consequence," he said.
So, disbursing loans to the farm sector is more secure than the industrial one, which is why banks are gradually preferring farmers, Huq said.
Mohammad Shams-Ul Islam, managing director of Agrani Bank, 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.
Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said 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.