The central bank has relaxed the agriculture loan rescheduling policy as farmers are failing to repay loans because of the falling prices of their produce caused by the ongoing blockade and strikes.

“The conditions for down payment for short-term farm loans can be relaxed based on banker-borrower relationship. Even, loans can be rescheduled without any down payments,” Bangladesh Bank said in a notice, which was issued on Monday.

The BB also directed the banks to disburse fresh loans to farmers after rescheduling their existing loans.

Defaulted loans in the farm sector increased to Tk 7,218.66 crore in January this year, up by 14.42 percent from Tk 6,308.95 crore in June of last year, according to data from the central bank. 

“Many farmers have failed to pay back their loans in January as they could not sell their produce at fair prices due to the nonstop blockade and strikes,” a BB official told The Daily Star yesterday.

Six state banks -- Sonali, Janata, Agrani, Rupali, Bangladesh Krishi Bank and Rajshahi Krishi Unnayan Bank -- held the majority of the defaulted farm loans. The defaulted loans at these banks stood at Tk 7,131.63 crore in January, while the amount at private and foreign commercial banks was Tk 87.03 crore.

The ongoing political unrest also affected the disbursement of fresh farm loans, which declined 3.8 percent year-on-year in the first seven months till January of the current fiscal year. In total, banks disbursed Tk 8,484 crore as agriculture loans in the July-January period, down from Tk 8,820 crore in the same period a year ago.

Prices of the majority of agriculture products have declined substantially at rural sales centres after the BNP-led alliance launched the transport blockade on January 6, crippling the supply chain in most parts of the country. 

Earlier last week, the BB directed banks not to file cases against farmers who have defaulted on their loans.

The average per day loss incurred by the agriculture sector was Tk 288 crore, according to Dhaka Chamber of Commerce and Industry.