Lenders disbursed Tk 16,180.8 crore in farm loans during the July-February period of fiscal 2020-21

Agriculture loan disbursement rose 7.2 per cent in the first eight months of the fiscal year, owing to the increasing demand for such loans as the central bank lowered their interest rate amid the pandemic.

Lenders disbursed Tk 16,180.8 crore in farm loans during the July-February period of fiscal 2020-21, according to the latest data from the Bangladesh Bank.

The disbursement figure of the loans in the first eight months of the fiscal year was at 61.54 per cent of the full-year target.

The central bank has set a disbursement target of Tk 26,292 crore for this fiscal year.

A lower interest rate amid the pandemic helped to boost credit demand among farmers, said BB officials.

Besides, the banking watchdog put pressure on the lenders to increase the disbursement of loans to the farmers amid the pandemic, which was another reason behind the rising trend of disbursement.

In April last year, BB set the interest rate on agricultural loans at 4 per cent for 15 months amid the coronavirus outbreak in the country.

The scheme will end on June 30 this year.

Usually, the banks are supposed to disburse loans at the maximum 9 per cent interest rate to the farmers.

But since April, the central bank startedsubsidising 5 per cent of the interest and the farmers had to bear the remaining 4 per cent.

Of the total disbursement during the period, the eight state-run banks disbursed Tk 7,331.9 crore, which was at 66.4 per cent of their target for the fiscal year.

On the other hand, 47 private commercial and foreign banks disbursed Tk 8,848.9 crore, which was at 58 per cent of their target.

During the period, Bangladesh Krishi Bank disbursed the highest of Tk 4,367.2 crore, which was 72.8 per cent of their target; Rajshahi Krishi Unnayan Bank disbursed Tk 1,340.9 crore; Islami Bank Bangladesh disbursed Tk 1,160.4 crore; Sonali Bank disbursed Tk 718.97 crore; Dutch Bangla Bank disbursed Tk 466.6 crore and Eastern Bank disbursed Tk 403.6 crore, as per the BB data.

It is another good sign that farm loan recovery also rose during the period. 

In the first eight months of the fiscal year, lenders recovered Tk 17,492.4 crore from farmers — up 12.8 per cent from a year earlier.

“It is a positive sign,” said Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank.

The bank recovered Tk 4,521.6 crore during the period — the highest.

“The increasing trend of farm loan recovery amid the loan moratorium facility once again proves that small and medium farmers have good repayment behaviour,” Prodhania added.

The central bank had offered a moratorium on instalments of loan repayments from January to December of last year to give some breathing space to the borrowers amid the pandemic.

“We did not put pressure on the farmers amid the pandemic but they repaid their loans voluntarily,” Prodhania said.

Alongside the regular farm loan disbursement process, as many as 43 banks are implementing the Tk 5,000 crore rescue package announced by the government on April 13 last year for the agriculture sector.

The tenure for the loans was set at 18 months, including a grace period of six months.

Banks will borrow the funds at a 1 per cent interest rate and lend at 4 per cent to farmers in line with the BB guidelines.

As of February this year, the 43 lenders had disbursed at Tk 3,563.23 crore among 151,717 farmers, as per the BB data.

The lenders will have to complete the agri-stimulus disbursement process within March 31.

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