Farm loan disbursement rose 23 percent year-on-year to Tk 4,235.74 crore in the first quarter of 2017-18, according to central bank data.
Bangladesh Bank officials said banks sitting on surplus liquidity have showed increased interest in disbursing agriculture credit amid a sluggish trend in the industrial sector credit growth.
Growth of industrial loan disbursement fell to a five-year low in fiscal 2017 despite a sharp decline in interest on lending.
Industrial loan disbursement registered a 13.51 percent growth in the last fiscal year compared to 20.77 percent in the previous year, the BB data showed.
The banks are also disbursing a hefty amount of consumer loans with a view to earning quick profits, the officials said.
In July-August of the current fiscal year, eight state-owned commercial and specialised banks -- Sonali, Janata, Agrani, Rupali, BASIC, BDBL, Bangladesh Krishi and Rajshahi Krishi Unnayan Bank -- together disbursed Tk 1,475.25 crore in agriculture loans.
The amount is 15.38 percent of their total annual farm loan disbursement target of Tk 9,290 crore.
Private and foreign banks together provided Tk 2,760.49 crore in agriculture loans during the period. The sum is one-fourth of their total annual farm loan disbursement target of Tk 8,260 crore.
To use their idle funds, banks are also trying to invest heavily in government securities that offer interest rates between 2.98 percent and 8.07 percent.
But the banks now can invest a limited amount of funds in treasury bills and bonds as the government is not borrowing much from the banking sector, the BB officials said.