Farm loan release drops by 13.7pc in February

Farm loan disbursement by banks dropped by 13.7 per cent or Tk 315.57 crore in February this year compared to the previous month.

The banks disbursed Tk 1,987.9 crore in farm loans in February against Tk 2,303.47 crore in January, according to the Bangladesh Bank data released on Wednesday.

The amount of farm loan disbursement also dropped 1.22 per cent or Tk 24.62 crore in February compared to Tk 2,012.52 crore disbursed in the same month of the previous year.

Overall dismal loan disbursement by the banks might be the reason behind the fall in credit issuance to farmers, bankers said.

Growth in credit issuance by the banks to the private sector dropped to 9.2 per cent and 9.13 per cent respectively in January and February.

Credit issuance to the private sector was far below the BB-projected rate of 14.8 per cent in FY20.

The central bank set a farm loan disbursement target of Tk 24,124 crore for the banks for FY20, raising the target by 10.66 per cent from the Tk 21,800-crore target set for FY19.

However, farm loan disbursement in the July-February period of the current fiscal year 2019-2020 amounted to 6.93 per cent, Tk 978.61 crore higher than the disbursement in the same period of the fiscal year 20182019.

In July-February of FY20, banks disbursed Tk 15,092.17 crore in farm loans against loans worth Tk 14,113.56 crore disbursed in the same period of FY19.

Although the farmers are able to avail loans due to the BB-set policy, the rate of interest imposed on them remains a major concern.

As per the BB data, the farmers were charged interests, on an average, at the rate of 19 per cent as 35.14 per cent of the farm loans were disseminated by the banks through microfinance institutions or nongovernmental organisations in FY19.

With the disbursement in July-February this year, the amount of outstanding farm loans increased to Tk 43,315.86 crore.

Against the disbursement in July-February this year, the banks recovered Tk 15,508.30 crore against the recovery of Tk 15,321.49 crore during the corresponding period last year.

As per the central bank’s farm loan policy, the banks are supposed to disburse 2 per cent of their total outstanding loans as farm loans. (Source: New Age)