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Farm loan disbursement by banks increased for the second consecutive month in October with a 34.53-per cent or Tk 641.73 crore year-on-year increase in the month.
Banks disbursed Tk 2,500.16 crore in farm loans in October against Tk 1,858.43 crore in the same month of last fiscal year, according to the Bangladesh Bank data released on Thursday.
In September this year, banks’ farm loan disbursement rose by 12.91 per cent to Tk 1,584.51 crore against Tk 1,403.28 crore in the same month of last year.
Agricultural loan disbursement was dismal in the first two months (July and August) of the current fiscal year as floods submerged farmlands in around 30 districts across the country.
In July-August in FY20, farm loan disbursement by the banks dropped by 5.75 per cent to Tk 1,970.16 crore against the disbursement of Tk 2,090.36 crore in the same period in last year.
Bankers said that demand for farm loans increased as the farmers resumed crop cultivation in September this year after floods.
In July-October of FY20, farm loan disbursement increased by 13.13 per cent or Tk 702.76 crore to Tk 6,054.83 crore from Tk 5,352.07 crore in the same period of FY19.
The loan disbursement in four months (July-October) of FY20, however, accounts for 25 per cent of the target set by the central bank.
For FY20, the central bank set Tk 24,124 crore as the farm loan disbursement target for banks, raising the target by 10.66 per cent from Tk 21,800 crore set for FY19.
In FY19, actual disbursement by the banks was Tk 23,616.25 crore while the amount was Tk 20,998.70 crore in FY17 and Tk 21,393.55 crore in FY18.
Although the farmers are availing 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 19 per cent interest on average as 35.14 per cent of the farm loans was disseminated by banks through microfinance institutions or non-governmental organisations in FY19.
With the disbursement in July-October of FY20, the amount of outstanding farm loans increased to Tk 42,388.77 crore.
Along with the increase in disbursement in the four months, recovery of agricultural credit also increased to Tk 6,758 crore against the recovery of Tk 6,556.40 crore in the same period of last year.
As per the central bank’s farm loan policy, banks are supposed to disburse 2 per cent of their total outstanding loans as farm loans.
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