Farm loan disbursement by the country’s banks dropped by 60 per cent or Tk 2,442.99 crore in April-May this year compared with the amount disbursed in the same period of last year due mainly to the coronavirus outbreak-induced disruptions. Due to the plunge in the disbursement, the banks are likely to miss for the first time the farm loan disbursement target set by the Bangladesh Bank for the fiscal year 2019-2020. The first coronavirus cases were detected in the country on March 8 this year, prompting the government to announce general holidays along with imposing restrictions on movement. The country went into holidays for around two months starting on March 29 and ending on May 30, leaving credit operations of the banks and non-governmental organisations, also known as microfinance entities, almost suspended. So, credit issuance to the agriculture sector dropped to Tk 1,628.74 crore in April-May this year from Tk 4,071.73 crore in the same period last year. In April and May, the banks and NGOs disbursed only Tk 496.63 crore and Tk 1,132.11 crore respectively in farm loans. In the last year’s April and May, the disbursement was Tk 2,261.51 crore and Tk 1810.22 crore respectively. The disbursement dropped by 78.04 per cent in April and by 37.46 per cent in May. As a result, the disbursement of farm loans dropped by 8.78 per cent, or Tk 1,785.12 crore, to Tk 18,550.6 crore in July-May of the fiscal year 2019-2020 against the disbursement of Tk 20,335.72 crore in the same period in the last fiscal year. The overall dismal loan disbursement by the banks might be the reason for the fall in credit issuance to farmers, bankers said. The private sector credit growth dropped to a record low of 8.82 per cent in April this year as the country’s local and international trade and business was virtually closed during the shutdown. Credit issuance to the private sector was far below the BB-projected rate of 14.8 per cent in FY20. Besides, poor state of loan recovery from all the sectors during the pandemic has caused liquidity crunch for the banks that resulted in a plunge in the farm loan disbursement. The central bank set a farm loan disbursement target of Tk 24,124 crore for the banks for FY20, raising the target by 10.66 per cent from the Tk 21,800-crore target set for FY19. However, farm loan disbursement in the first eleven months of FY20 was far below the BB-set annual target, leaving a gap of 30.04 per cent or Tk 5,573.4 crore between the disbursement and the target and one month to bridge the gap. If the current trend is taken into consideration, the disbursement of Tk 5,573.4 crore in one month would be a difficult task for the banks as they had never attained such a mammoth disbursement record in a single month, an official of the central bank said. Although the farmers are able to get loans due to the BB-set policy, the rate of interest imposed on them remains a major concern. As per the BB data, the farmers were charged interest, on average, at the rate of 19 per cent as 35.14 per cent of the farm loans were disseminated through microfinance institutions or non-governmental organisations in FY19. With the disbursement in July-May this year, the amount of outstanding farm loans increased to Tk 44,219.73 crore. Along with the poor disbursement in July-May, the farm loan recovery was also dismal as the repayment dropped by 60 per cent in April and by 67.44 per cent in May. As per the BB’s farm loan policy, the banks are supposed to disburse 2 per cent of their total outstanding loans as farm loans.
