Despite loan and interest waivers and other relief, defaults on agricultural loans in Bangladesh are not falling. Citing Bonik Barta, Agricare24 reports that defaulted farm loans stood at Tk 18,500 crore at the end of the 2025-26 fiscal year, about 30 percent of all loans disbursed in the sector. About 90 percent of the defaults are with state-owned banks.
The government recently waived about Tk 450 crore of farm loans and interest to ease the burden on farmers, but the bulk of the defaults has not come down, raising fresh questions about loan supervision, proper use of credit and recovery.
According to Bangladesh Bank, Tk 42,834 crore was disbursed to agriculture in 2025-26, about 23.5 percent more than the previous year and about Tk 4,500 crore above target.
Economists and analysts say part of farm credit is spent outside agriculture, and that weak follow-up after disbursement, crop losses to natural disasters and production risk leave many farmers unable to repay on time. Because a large share is lent through private organisations and NGOs, farmers also face higher interest, they say.
Experts argue that the seasonal and natural risks of farming call for a separate framework for farm loans: rather than classing a loan as defaulted once a deadline passes, production, crop losses and disasters should be taken into account. The bigger challenge now, they say, is not lending more but ensuring loans are used properly, output rises and repayment comes on time.
Photo: Press Information Department / Wikimedia Commons (public domain)
Source: Agricare24
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