Farm loan disbursement by banks increased by 20.3 per cent in July, the first month of the financial year 2025-26, compared with the same month in the previous year, according to Bangladesh Bank data.
BB data showed that, banks disbursed Tk 2,154 crore in July, which was 20.29 per cent higher compared with the disbursement of Tk 1,790.71 crore in July FY25.
The disbursements in July 2024 were lower due mainly to the countrywide protests over quota reform, which led to the fall of Awami League-led government on August 5, 2024.
In July FY26, recovery of agricultural credit by all scheduled banks was Tk 2,953.62 crore which was 15.66 per cent higher compared with the recovery of Tk 2,553.79 crore in July FY25.
At the end of July 2025, the outstanding balance of agricultural credit (including interest) for all scheduled banks was Tk 59,470.95 crore, which was 4.53 per cent higher from Tk 56,894.54 crore at the end July 2024.
The overdue agricultural credit increased by 96.23 per cent to Tk 23,806.61 crore at the end of July 2025 as compared with Tk 12,131.73 crore at the end of July 2024.
The central bank had set an agricultural loan disbursement target of Tk 39,000 crore for FY26, a 2.63 per cent increase from Tk 38,000 crore target in FY25.
BB data showed that banks disbursed Tk 37,326 crore in FY25, slightly up from Tk 37,153 crore in FY24.
The central bank set the farm loan release target to increase agricultural production to control inflationary pressures and achieve gross domestic product growth target.
Among different agricultural sectors, crop farming received the highest share of loans of 38 per cent, followed by livestock and poultry at 34 per cent, fisheries 16 per cent and poverty alleviation loan of 4 per cent.
As agriculture plays a vital role in the country’s economy, issuing credit to farmers has become crucial to keeping the agriculture-based rural economy vibrant, especially amid the ongoing global economic crisis.
More than 40 per cent of the country’s workforce is directly employed in the agriculture sector.
Farm loans enable farmers to invest in inputs like seeds, fertilisers and machinery, leading to increased productivity and economic growth.
Farm loans also contribute to rural development by providing income opportunities and improving infrastructure in rural areas.
In May 2022, the central bank instructed the country’s banks to disburse agricultural credit at a concessional interest rate of 4 per cent for cultivating import substitute crops, including pulses, oilseeds, spices and maize.
Banks disbursed Tk 32,829 crore in agricultural and rural loans in FY23 compared with that of Tk 28,834 crore disbursed in FY22.
Most of these loans were channelled through non-government organisations, which charge interest rates ranging from 24 to 30 per cent.
To encourage direct lending to farmers, the Bangladesh Bank has instructed banks to disburse a minimum of 50 per cent of their total disbursements through their own channels.
