The ratio of farm loan disbursement against the target fixed by the central bank for the fiscal year 2020-2021 dropped year-on-year in the first seven months of the fiscal.
As per the Bangladesh Bank data, farm loan disbursement by state-owned commercial banks, specialised banks and private commercial banks reached 53.81 per cent of the annual target in the July-January period of FY21.
In the July-January period of FY20, disbursement by all the banks stood at 54.32 per cent.
The BB data showed that disbursement of loans by all the banks stood at Tk 14,148.72 crore in the first seven months of FY21 against their disbursement target of Tk 26,292 crore for the entire fiscal year.
In July-January of FY20, farm loan disbursement by all the banks was Tk 13,104.27 crore against their target of Tk 24,124 crore for the entire fiscal year.
In FY20, the banks for the first time missed the farm loan disbursement target of Tk 24,124 crore amid the outbreak of the novel coronavirus.
The central bank has been keeping a close eye on credit issuance by the banks to the farmers so that disbursement would not fall short of its target in FY21.
Even though the farm loan disbursement ratio was lower in FY21, the volume of disbursement was Tk 1,043.73 crore higher in July-January of FY21 against disbursement reported in the same period of FY20.
In January 2021, the farmers received Tk 2,070.74 crore in agriculture loans against Tk 2,303.47 crore released in the same month in the previous year.
Disbursement in January was also lower than Tk 3,142.09 crore disbursed in loans in December 2020.
Disbursement in the first two months was comparatively better as the growth was 75 per cent higher than the disbursement in the first two months of the previous fiscal year.
The growth rate, however, gradually declined in the months of September, October and November.
The situation improved with a spike in demand for farm loans as the farmers started to borrow money for cultivation of rabi crops after being hit hard by excessive flooding during monsoon. The situation again deteriorated in January.
As agriculture plays a crucial role in the economy, issuing credit to the farmers has become vital to keeping the agriculturebased rural economy vibrant at a time when the industry and service sectors are struggling to recover from the adverse impacts of the coronavirus outbreak, the officials said.
As much as 40.6 per cent of the country’s workforce is directly employed in the agriculture sector.
As floods hit farmlands across the country in June, the central bank directed the banks to increase disbursement of the farm loans.
As part of the measures taken amid the flooding, the central bank asked the banks to ensure hassle-free and speedy assess to loans for the flood-hit famers as per their demands.
The instruction issued on July 23 asked the banks to issue credit facilities to the farmers so that they could start incomegenerating activities, such as poultry and cattle farming and feed production.
The banks were also directed to reduce dependency on microfinance institutions in releasing the farm loans as the method costs the farmers more than 20 per cent in interests.