A farmer nurtures a cabbage field at Joypara at Dohar in Dhaka on Wednesday. — Focusbangla photo

Farm loan disbursement by banks increased by 7.59 per cent or Tk 630.76 crore year-on-year in July-November of the current fiscal year 2020-2021 amid a central bank’s expansionary monetary policy to offset the coronavirus-induced economic shocks.

But the disbursement was much lower than the required growth to achieve the target set by the central bank for FY21.

As per Bangladesh Bank data, banks disbursed Tk 8,935.89 crore in July-November of FY21 against Tk 8,305 crore in farm loans in the same period of the previous year.

Considering the farm loan disbursement target of Tk 26,292 crore set by the central bank for FY21, banks were supposed to disburse Tk 2,191 crore on average whereas their credit issuance to farmers was Tk 1,787.18 crore, 18.43 per cent less than the target.

Though the 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 following three months — September, October and November.

In FY20, banks for the first time missed the firm loan disbursement target of Tk 24,124 crore, prompting the central bank to put additional pressure on banks to expedite disbursement in the early parts of the current fiscal year, said officials of the central bank.

As agriculture plays a vital role in the country’s economy, issuing credit to farmers has become crucial to keeping the agriculture-based rural economy vibrant at a time when the industry and service sectors are struggling to recover from the impacts of the coronavirus outbreak, they said.

As much as 40.6 per cent of the country’s workforce is directly employed in the agriculture sector.

As floods hit farmland across the country in June and a huge population is directly and indirectly involved in agriculture, the central bank directed banks to raise disbursement of farm loans.

As part of the measures, the central bank, amid the flooding, asked the banks to ensure a hassle-free and on-time loan facility for the flood-hit famers as per their demands.

The instruction issued on July 23 asked the banks to issue credit facility to farmers so that they could start income‑generating activities such as poultry and cattle farming and feed production.

In the agricultural and rural credit policy and programmes for FY21, the BB lowered the farm loan disbursement target to 2 per cent of the banks’ loans and advances from 2.5 per cent in the last fiscal year.

The banks were also directed to reduce dependency on microfinance institutions in releasing farm loans as the method costs the farmers more than 20 per cent in interest.

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