Farm loan disbursement rises, pvt banks take lead

Agri loans

• Agri lending target is Tk26,292 crore for this fiscal year
• 17.82% of it disbursed in July-September period  
• Private banks target Tk15,247 crore disbursement
• In Q1, they freed 19.03% loan against the target
• Of the public banks, Krishi Bank disbursed the highest

In an unprecedented move, the government declared general holidays at the end of March in a bid to stem the spread of the pandemic that has shaken the world.

The effect of the closure of almost all socio-economic activities, however, were different in rural and urban context.

Economic activities came to a grinding halt in the cities as the virus-led shutdown forced the dwellers to confine themselves to their apartments. But, in sharp contrast, the villages remained abuzz and bustling with all regular activities. 

Neither agriculture, pisciculture or cattle rearing took any virus beating, nor did farmers leave their croplands. 

After around eight months of the virus outbreak, the government is now implementing stimulus packages affecting the agriculture lending positively.   

Farm loan disbursement rose by 31.77% in the first quarter (Q1) of this fiscal year, compared to the corresponding period of the last fiscal year. 

According to the central bank's latest report, styled 'Agricultural and Non-Farm Rural Credit Position', private and foreign banks are taking the lead in crop loan disbursement than the public banks.   

Agricultural lending in the first quarter last fiscal year was around Tk3,554 crore which stood at around Tk4,684 crore in Q1 of the current fiscal year. This means year-on-year farm loan disbursement registers a more than Tk1,129 crore increase.     

For the current fiscal year, farm loan disbursement target has been set at Tk26,292 crore, with 17.82% of the lending target disbursed in the July-September period.   

The rate in Q1 of the 2019-20 fiscal year was 14.73% while the annual disbursement target was Tk24,124 crore.   

Contacted, Palli Karma-Sahayak Foundation (PKSF) Chairman Qazi Kholiquzzaman Ahmad commented that agricultural loans are being disbursed this fiscal year quickly and in time, and this will impact agriculture positively. 

"However, loan disbursement should be prompt and proper not only in agriculture, but also in other sectors. Economic development may slow down if loans are not distributed in time," he told The Business Standard. 

Qazi Kholiquzzaman thinks farm activities were not hampered as virus infection was low in rural areas. Besides, government initiatives such as arranging transports for farm workers and providing farmers with agro-machinery loans helped agriculture counteract the virus fallout.      

Pvt banks ahead in agri lending 

Private banks set a Tk15,247 crore farm loan disbursement target for the current fiscal year and distributed Tk2,901 crore in Q1 – 19.03% of the total target. 

At the same time, the state-owned banks disbursed Tk1,782 crore, or 16.14% of their agri lending target. Their disbursement target for the 2020-21 FY is Tk11,045 crore.

Of the public banks, Bangladesh Krishi Bank disbursed the highest Tk1,036 crore farm loan in Q1.

"Our farm loan disbursement surged in the first quarter this fiscal year than the corresponding period of the last fiscal year as the government-announced stimulus distribution began," Md Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank, told TBS.

He hoped their uptrend in crop loan disbursement would continue in upcoming months.  

Rajshahi Krishi Unnayan Bank has targeted Tk1,850 crore farm loan disbursement for the current fiscal year while it distributed more than Tk287 crore in July-September period.    

An analysis of agri loan disbursement shows that crops got the lion share, Tk2,483 crore, of the farm loan while livestock and fisheries came up second and third respectively.