Agri credit disbursement target up 53.85pc to Tk 600b for FY’27

Bangladesh Bank (BB) has set a target of disbursing agricultural and rural loans worth Tk 600 billion during the fiscal year (FY) 2026-27 with an aim to give an impetus to rural economy and farm productivity.

The disbursement target is 53.85-percent higher than Tk 390 billion set for the previous fiscal.

To achieve the target within the stipulated time, the central bank also instructed the commercial banks concerned to allocate at least 4.0 per cent of their total lending to the agricultural sector in place of the existing ceiling of 2.50 per cent.

Of the total target, state-owned commercial and specialised banks have been assigned to disburse Tk 205 billion while private and foreign commercial banks will have to disburse Tk 395 billion during the current fiscal.

The BB disclosed the new target unveiling details of the Agricultural and Rural Credit Policy and Programme for FY2026-27 on Monday at a press briefing after a meeting with top executives of the commercial banks at its headquarters.

The new policy has laid emphasis on ensuring credit access for genuine farmers, expanding financing in fisheries and livestock sectors, and supporting rural economic activities.

Under the policy, local agricultural extension officers, assistant agricultural officers, fisheries officers and livestock officers will play their roles in identifying genuine farmers.

Information from ‘farmer card’ issued by the government may also be used for the purpose.

After unveiling the policy, BB Deputy Governor Dr Md Habibur Rahman said the share of the agriculture sector in the country’s GDP is more than 10 per cent but the share of farm lending in the financial sector is only 2.50 per cent, which is very insufficient.

As the government plans to largely promote the agriculture sector, which is one of the strongest pillars of the economy, the share of farm lending has been raised to 4.0 per cent, he said.

And the banks concerned have been directed to take necessary steps in attaining their credit-disbursement targets.

The latest policy has also eased some requirements for borrowers in the fisheries and livestock sectors.

Banks have also been instructed to provide loans to organised groups of farmers and relax the prescribed membership limit wherever necessary.

Loans of up to Tk 0.5 million in the fisheries and livestock sectors will be eligible for collateral-free financing.

Banks have also been advised to consider alternative forms of security, including personal, social and group guarantees, particularly for women and marginal farmers.

The central bank has instructed banks to ensure that borrowers are not charged fees or charges beyond those prescribed under the policy.

It has also sought to simplify the process of obtaining loans under contract farming arrangements.

The policy has incorporated provisions for revising the operational guidelines of the Bangladesh Bank Agricultural Development Common Fund (BBADCF) and facilitating loans to organised farmers and farming groups.

It has also allowed financing for hatchery fish fry production, poultry chicks and duck rearing.

Two separate refinancing facilities –Tk 100 billion and Tk 30 billion–have been incorporated in the policy framework.

To address the impact of climate change, the policy also seeks to bring agricultural borrowers and customers under insurance coverage based on mutual agreements between banks and farmers.

New crops and agricultural activities, including sweet potato, ash gourd, mixed grains, rosemary, asparagus, sweet potato varieties, rubber fruit and egg-shell-based fertiliser production, have also been brought under the agricultural and rural credit programme.

Under the policy, financing provisions determine specific loan disbursement schedules, crop-cutting dates, and harvest-based repayment timelines for high-value and seasonal crops like banana, papaya, mango, lemon, guava, chilli, and lychee

BB Spokesperson and Executive Director Arief Hossain Khan said providing adequate financing to the agricultural and rural sectors is essential for reducing poverty, creating employment, increasing incomes of marginal and poor people, and establishing a sustainable economy.

He also said the central bank expects the new policy to contribute to higher agricultural production and supply, employment and income growth in rural areas while supporting overall macroeconomic stability and sustainable development.

Hailing the new policy, Managing Director and Chief Executive Officer of Southeast Bank PLC Md. Khalid Mahmood Khan said the agriculture sector is the backbone of the economy and the bank has already intensified its focus on that area.

Citing data, the seasoned banker said his bank financed Tk 8.0 billion in the previous fiscal (FY’26).

The bank needs to give loans equivalent to Tk 14 billion in this fiscal under the new policy, which is achievable.

He further said the bank instructs their officers to focus more on selection of the borrowers through cross-checking with the data of concerned government offices and regular post-disbursement monitoring to ensure proper usage of the fund.

Source: The Business Standard