Disbursement of farm loans by the scheduled banks declined by 26.86 per cent in July, the first month of the current fiscal year (2018-2019), compared with that in the same month of the previous fiscal year.
As per the Bangladesh Bank data, the scheduled banks including foreign and private commercial banks disbursed Tk 1,151.12 crore in farm loans in July this year against the figure of Tk 1,574.07 crore in July last year.
The amount of farm loans disbursed by the banks in July this year was 5.28 per cent of the annual target of Tk 21,800 crore for FY19.
In July of FY18, the banks had distributed 7.72 per cent of the annual target of Tk 20,400 crore.
BB officials said that the banks might have opted to go slow regarding the farm loan disbursement amid their emphasis on devising strategy for adjusting advance deposit ratio along with implementing single digit lending rate.
Disbursement of farm loans, however, might increase gradually as the banks are bound to follow the central bank-set target to avoid punitive measures, they said.
As per central bank rules, the banks are supposed to disburse 2.50 per cent of their total loans and advances in a fiscal year in the farm sector.
The eight state-owned banks — Agrani Bank, BASIC Bank, BDBL, Bangladesh Krishi Bank, Janata Bank, Rajshahi Krishi Unnayan Bank, Rupali Bank and Sonali Bank — disbursed Tk 368.07 crore in farm loans in the period, which is 7.72 per cent or Tk 30.8 crore lower than Tk 398.87 crore disbursed by the entities in the first month of FY18.
The government banks disbursed only 3.73 per cent of their annual target of Tk 9,875 crore, while their disbursement in the same month in the previous fiscal year was 4.16 per cent of their annual target of Tk 9,590 crore.
Rupali Bank’s farm loan distribution rate was the lowest, 1.01 per cent, among the banks, while Sonali
Bank was the second lowest as it disbursed only 2.28 per cent of its annual target.
Of the eight banks, Sonali, BASIC, Rupali and Janata, specialised BKB and RAKUB faced Tk 17,442.74 crore capital shortfalls as of December 31, 2017 amid loan scams and their failure in recovering growing defaulted loans.
Capital shortfalls at the banks were Tk 19,446.6 crore at the end of December last year.
Apart from the state-owned banks, the private commercial banks and foreign commercial banks disbursed Tk 783.05 crore in farm loans in July of FY19, which is 6.57 per cent of their target of Tk 11,925 crore in farm loans for the fiscal year.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Banking