Disbursement falls in Jul-Oct

Farm loan disbursement fell 16 percent year-on-year to Tk 5,352 crore in the four months to October in the current fiscal year, according to central bank data.

Some banks have recently slowed down lending as part of their efforts to weather the ongoing liquidity crisis, leaving an adverse impact on overall agriculture credit disbursement, Bangladesh Bank officials said.

The central bank set a farm loan disbursement target of Tk 21,800 crore for 2018-19, of which 24.55 percent was disbursed between July and October.

Eight state-owned commercial and specialised banks -- Sonali, Janata, Agrani, Rupali, BASIC, BDBL, Bangladesh Krishi and Rajshahi Krishi Unnayan Bank -- together disbursed Tk 2,608 crore.

Private and foreign banks provided Tk 2,744 crore in agriculture loans during the period.

Lenders are under pressure to adjust their advance-deposit ratio by next March by way of declining credit disbursement, a BB official said.

As per the central bank instruction, traditional lenders will have to slash the ADR by 1.5 percentage points to 83.5 percent from existing 90 percent and shariah-based banks to 89 percent from 90 percent.

As of October 25, the ratio of 21 banks and Islamic wings of six other lenders was higher than the permissible limit, BB data showed.

Banks are also facing a tough situation in collecting deposits as clients prefer savings certificates and bonds because of the higher return they offer compared to that on banks' savings products.

The central bank will send out an instruction to banks soon to speed up farm loan disbursement so that the agriculture sector can continue crop production without any disruption, the BB official said.