Agricultural lending in the first three months of the current fiscal year rose 11 per cent from a year earlier to Tk 5,210 crore, as banks offer a range of funds to the sector.

Managing directors of several banks said many people who had recently lost jobs in industry were turning to agriculture to earn a living, which had a positive effect on overall farm loan disbursement.

Bangladesh Bank set a farm loan disbursement target of Tk 28,391 crore for FY2021-22, of which 18.35 per cent was achieved between July and September. A year earlier, 17.82 per cent of the target had been achieved in the same period.

Shirin Akhter, managing director of Bangladesh Krishi Bank, said the pandemic slowdown had left many people jobless and they had joined the farm sector, taking up poultry, fish and livestock production and rearing. Against this background, demand for farm loans was rising and would keep rising, she said.

Repayment of farm loans has also risen recently, helping banks reduce defaults in the sector. As of September, defaulted farm loans stood at Tk 4,057 crore, 17 per cent less than a year earlier.

Shirin said farmers and livestock growers were very good customers who repaid on time even when they faced unexpected problems.

Emranul Huq, managing director of Dhaka Bank, agreed. He said diversification in agriculture had had a positive effect on loan disbursement. Many farmers now grow various kinds of flowers and fruit, which was not seen before, and banks are keen to lend to them. Because repayment is better than in industry, lenders are trying to lend more to the sector.

"In industry, a single customer has to be given a huge loan. If that borrower defaults, the whole bank has to bear it," he said. Lending to agriculture is safer than lending to industry, which is why banks increasingly prefer farmers, he said.

Mohammad Shams-ul Islam, managing director of Agrani Bank, said the central bank had taken punitive action against banks that failed to reach their annual farm loan targets.

Syed Mahbubur Rahman, managing director of Mutual Trust Bank, said private banks had recently been increasing their capacity to disburse farm loans, and their management boards had stepped up monitoring of farm loan projects.

Source: Amader Shomoy. First published in Bengali on The Agro News.