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Disbursement of farm loans stood at Tk22,749.03 crore in the 2019-20 fiscal year, which was 5.70% or Tk1,375 crore less than the target of Tk24,124 crore
Farm loan disbursement by the country’s banks has failed to achieve the target in the concluding fiscal year with the country’s economic activities remaining halted for around two months owing to the deadly virus.
According to the latest data available from the central bank, disbursement of farm loans stood at Tk22,749.03 crore in the 2019-20 fiscal year, which was 5.70% or Tk1,375 crore less than the target of Tk24,124cr.
Disbursement of farm loans also dropped by 3.67% in FY20 than in the previous fiscal year. In the 2018-19 fiscal year, the country’s banks disbursed Tk23,616.25 crore as farm loans, as shown in the data.
The country’s banks could not achieve the farm loans disbursement target for the first time since the Bangladesh Bank(BB) had fixed the target for disbursement of farm credit due to economic activities coming to a halt owing to the coronavirus pandemic, said BB’s executive director Ashok Kumar Dey.
The first coronavirus case was detected in the country on March 8 this year, prompting the government to declare general holidays along with imposing restrictions on movement.
The country went into holidays for around two months, starting on March 29 and ending on May 30, leaving credit operations of the banks and non-governmental organizations, also known as microfinance entities, almost suspended.
As a result, loans issued to the farm sector dropped to Tk1,628.74 crore in April-May this year from Tk4,071.73 crore in the same period last year, according to bankers.
Not only agriculture credit but also overall loans disbursed by the scheduled banks remained almost suspended during the countrywide shutdown, say bankers.
Besides, poor loan recovery from all sectors during the pandemic has caused liquidity crises for the banks, causing a plunge in farm loan disbursement, they have pointed out.
As per Bangladesh Bank data, private sector credit growth stood at 8.86% in May, which was much lower than the target of 14.8% for the fiscal year 2019-20.
Talking to Dhaka Tribune, Bangladesh Krishi Bank Managing Director Ali Hossain Prodhania said farm loans disbursement dropped in FY20 due to the fallout caused by the virus. However, Bangladesh Krishi Bank disbursed 12% of loans higher than its target, he claimed.
On July 23, 2019, Bangladesh Bank fixed farm loan targets for the 2019-20 fiscal year at Tk24,124 crore.
Refinance scheme for agriculture sector for economic revival
To tackle the economic losses created by the deadly virus, on April 14 Bangladesh Bank launched a Tk5,000-crore special refinance scheme for the country’s agricultural sector at 4% interest rate.
But banks have been very slow to disburse money from the stimulus fund. As of yesterday, the country’s banking sector had disbursed only Tk380 crore to affected farmers from the Tk5,000 crore stimulus fund. However, the central bank has instructed banks to disburse all the stimulus funds by August this year.
(DT)
