Disbursement of agricultural loans increased by 8.71 percent year-on-year to reach 8,230.88 million crores in the first five months of the current fiscal year, according to central bank data .
Commercial banks have long been showing increased interest in the disbursement of more agricultural credit in a context of slowing lending in the industrial sector, according to officials at the Bangladesh Bank.
Between July and November 2017, eight state-owned commercial and specialty banks – Sonali, Janata, Agrani, Rupali, BASIC, BDBL, Bangladesh Krishi and Rajshahi Krishi Unnayan Bank – disbursed a total of 3,521, 17 crores of agricultural loans.
The amount is 34.63% of the annual total agricultural leasing goal of 9,590 crores of Tk.
Private and foreign banks lent Tk 4,909.71 crore to the sector during the period, which is almost half of their total annual target for farm loans of Tk 10,810 crore.
BB representatives stated that the disbursement of the agricultural loan could slow down in the coming months.
Six months ago, most banks had excess liquidity, which encouraged them to spend more money on the agricultural sector.
The excess liquidity of some banks has, however, decreased in recent months due to an increase in non-performing loans.
In addition, many banks, burdened by classified loans, are forced to keep a large amount of provisions that has weakened their liquidity position, officials said.
Banks also disbursed a considerable amount of consumer loans to make quick profits, according to the authorities.
The growth in industrial loan disbursement fell to its lowest level in five years in 2016-17 despite a sharp decline in interest rates on loans.
Loans granted to the industrial sector grew by 13.51% in the last financial year compared to 20.77% the previous year, according to BB data.