Agriculture lending picks up as seasonal crops raise demand

Farm loan disbursement accelerated in the first four months of the fiscal year on the back of loans flowing to seasonal crops in a sign that will encourage farmers to grow essential agriculture products.

Agriculture lending rose 13.13 percent year-on-year to Tk 6,055 crore between July and October, according to data from the central bank.

Banks usually try to disburse a major portion of their annual farm loans between September and December when farmers spend busy time harvesting boro paddy and winter vegetables, a central banker said.

“This is a good indication that lenders are not showing reluctance to give out farm loans at a time when they are facing liquidity crunch,” he said.

Private sector credit growth plummeted to a nine-year low of 10.04 percent in October, but the trend has not had any negative impact on the farm loan disbursement.

As per the central bank instruction, banks have to give out at least 2.5 percent of their total disbursed loans to the farm sector. The banking sector has a farm loan disbursement target of Tk 24,124 crore in 2019-20.

Last month, the central bank asked banks to disburse agriculture loans for the cultivation of onion in order to tackle the sudden steep rise in the price of the key cooking ingredient in the years to come, the central banker said.

Banks have been asked to follow the instruction so that the country can achieve self-sufficiency in harvesting the bulb, he said.

Eight state-run banks – Sonali, Janata, Agrani, Rupali, Bangladesh Krishi, Rajshahi Krishi Unnayan, Bangladesh Development, and BASIC Bank – together disbursed Tk 2,951 crore in farm loans in the July-October period, up 13.17 percent a year earlier.

Farm loan disbursement by private commercial banks went up 13.08 percent to Tk 3,103 crore.

Banks also gave out a good amount of farm loans in November, but the figure has not been published yet, the central banker said. The disbursement trend is still continuing, dispelling the government’s concern about the agriculture sector.