Loan disbursement by banks to farmers dropped by 9.17 per cent or Tk 755.25 crore in the July-November period of this fiscal year compared with that in the same period of the previous fiscal year amid worsening liquidity shortage in the banking sector.
State-run, private and foreign banks disbursed Tk 7,475.60 crore in farm loans in the five months of FY 2018-19 against Tk 8,230.88 crore disbursed in the same period of FY 2017-18, according to the latest Bangladesh Bank data.
Apart from the slowdown in loan disbursement, overdue amount in the farm loan segment also increased at the end of November this year.
At the end of November this year, overdue amount in the farm loan segment increased to Tk 6,731.91 crore or 17 per cent of Tk 39,606.40 crore in outstanding loans in the sector.
In November last year, Tk 6,419.98 crore was overdue in the farm loan segment, representing 16.34 per cent of Tk 39,286.08 crore in outstanding loans in the segment.
In the five months of FY19 state-owned banks, private commercial and foreign commercial banks disbursed 34.29 per cent of their annual farm loan disbursement target while they had disbursed 40.35 per cent of their target in the same period of FY18.
The central bank has set Tk 21,800 crore as farm loan disbursement target for FY19 for banks. The target was Tk 20,400 crore for FY18.
As banks were enjoying adequate liquidity in the first several months of last fiscal year, disbursement of farm loans by them was in line with their annual target, BB officials said.
They said disbursement of farm loans by the scheduled banks in the current fiscal year declined as many of the banks were going through liquidity crisis ahead of the national polls scheduled for December 30.
Slow deposit growth and higher volume of fund withdrawal were the main reason for the liquidity crisis in banks, they said.
Besides, advance deposit ratio adjustment-centric move of banks along with the implementation of single-digit lending rate were among the other reasons for the slowdown in farm loan disbursement.
BB officials, however, said that the disbursement of farm loans might increase gradually after the national polls if fund withdrawal declined.
As per the BB report, 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 3,668.29 crore in farm loans in July-November of FY19. The figure is 37.15 per cent of their Tk 9,875 crore annual target.
Farm loan disbursement by the banks was Tk 3,321.17 crore or 34.63 per cent of their annual target in the five months of FY18.
Rupali Bank’s farm loan distribution rate in July-November remained the lowest, 4.89 per cent of its annual target of Tk 400 crore, while Sonali Bank was the second lowest as it disbursed 20.51 per cent of its annual target of Tk 1,200 crore.
Private commercial banks and foreign commercial banks disbursed Tk 3,807.31 crore in farm loans in July-November of FY19, which is 31.93 per cent of their target of Tk 11,925 crore in farm loans for the fiscal year.
Farm loan disbursement by private and foreign commercial banks had totalled at Tk 4,909.71 crore in the five months of FY18. The figure is 45.42 per cent of their annual target for FY18.
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