Farm lending goes up 8.71pc in Jul-Nov

Farm loan disbursement rose 8.71 percent year-on-year to Tk 8,230.88 crore in the first five months of the current fiscal year, according to central bank data.

Commercial banks have long been showing increased interest in disbursing more agriculture credit amid sluggish lending in the industrial sector, according to officials of the Bangladesh Bank.

In the July-November period of 2017-18, eight state-owned commercial and specialised banks -- Sonali, Janata, Agrani, Rupali, BASIC, BDBL, Bangladesh Krishi and Rajshahi Krishi Unnayan Bank -- disbursed a total of Tk 3,321.17 crore in agriculture loans.

The amount is 34.63 percent of their total annual farm credit lending target of Tk 9,590 crore.

Private and foreign banks lent Tk 4,909.71 crore to the sector during the period, which is nearly half of their total annual farm lending goal of Tk 10,810 crore.

The BB officials said the farm loan disbursement may face a slowdown in the months to come.

Six months ago, most banks had excess cash, prompting them to channel more money to the farm sector.

The surplus liquidity in some banks, however, has decreased in the last few months because of an increase in non-performing loans.

Besides, a good number of banks, burdened with classified loans, are being forced to keep a large amount of provision that weakened their liquidity position, the officials said. 

Banks are also disbursing a hefty amount of consumer loans with a view to making quick profits, the officials said.

Growth of the industrial loan disbursement fell to a five-year low in 2016-17 despite a sharp decline in interest rates on lending.

Loans going to the industrial sector registered 13.51 percent growth in the last fiscal year compared to 20.77 percent in the previous year, the BB data showed.