Banks' lending to agriculture rose significantly in the first six months of the current 2025-26 fiscal year. A total of Tk 21,000 crore in farm loans was disbursed in the period, Tk 4,749 crore or 29 percent more than in the same period of the previous fiscal year.
Of Bangladesh Bank's farm loan target of Tk 39,000 crore for the current fiscal year, 53.87 percent was achieved in six months. The central bank currently requires banks to lend at least 2.5 percent of their net loan disbursement to agriculture.
Bangladesh Bank is, however, considering raising this agricultural lending target.
Target seen as inadequate
A report presented at a recent meeting with banks' managing directors (MDs) said agriculture contributes 10.94 percent of the country's GDP and employs about 46 percent of the total labour force. Yet although lending grows by an average of 5 percent a year, agriculture is not getting the priority it should.
According to Bangladesh Bank data, recovery of farm loans has also risen alongside disbursement. In the past six months, Tk 21,774 crore was recovered from the farm sector, Tk 2,657 crore or 13.90 percent more than in the same period of the previous fiscal year. As a result, total outstanding farm loans stood at Tk 62,723 crore at the end of December.
The central bank's report also said the target of lending only 2.5 percent of banks' net loans to agriculture is inadequate in the present situation. Adequate financing for agriculture is urgent to meet challenges such as rising production costs, climate risk, the use of modern technology and ensuring food security.
Because credit is limited, the investment needed for higher productivity, mechanisation, improved seed and fertiliser, irrigation management and climate-resilient agriculture is being held back, raising risks to food security and rural poverty reduction.
Central bank measures
A Bangladesh Bank official said the central bank is taking various initiatives to ensure food security and the overall development of farmers and the farm sector. Open and group lending programmes have been strengthened to improve transparency and awareness in loan disbursement. Banks have also been instructed to increase farm lending beyond their branches through agent banking, sub-branches, contract farming, the area approach and, where needed, MFI linkage.
Source: Jagonews24. First published in Bengali on The Agro News.
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