Dhaka, Bangladesh (BBN)– The farm credit disbursement is expected to cross the target by the end of this fiscal year (FY) as the central bank has beefed up efforts to make such credit available to the farmers, officials said.

The expectation came after achieving 93.28 per cent of the annual agriculture loan disbursement target of BDT 218 billion by the all banks in 11 months to May of the outgoing FY 2018-19.

Talking to the BBN, a top central banker said: “We hope the disbursement to exceed the target by the end of this FY.”

He said some banks, including a leading state-owned commercial bank (SoCB), have taken effective measures to achieve their respective disbursement targets.

Meanwhile, the farm credit disbursement grew by 3.63 per cent in the first 11 months of the FY ‘19 following continuous persuasion of the bankers by the central bank.

Disbursement of the farm credit rose to BDT 203.36 billion in the July-May of the FY ‘19 from BDT196.24 billion in same period of the previous fiscal, according to the central bank’s latest statistics.

Of the BDT 203.36 billion, eight public banks disbursed BDT 97.22 billion, and the remaining BDT 106.13 billion was disbursed by the private commercial banks (PCBs) and foreign commercial banks (FCBs).

The eight state-owned banks are Sonali Bank Limited, Janata Bank Limited, Agrani Bank Limited, Rupali Bank Limited, BASIC Bank Limited, Bangladesh Development Bank Limited (BDBL), Bangladesh Krishi Bank (BKB) and Rajshahi Krishi Unnayan Bank (RAKUB).

The loans are being given to 119 different agro and rural sectors include crop, fisheries, livestock, agricultural and irrigation equipments, solar irrigation system, high yielding variety of crops, tissue culture, jute cultivation, nursery, marginal and small farmers, sharecroppers, salt and betel leaf cultivation, apiculture, mushroom cultivation, hand looms, silk industry, cotton cultivation, rural finance, credit to women engaged in income generating agriculture and allied agricultural activities.

Under the existing provisions, if any bank fails to achieve its target, it will have to deposit the undisbursed amount of the target with the BB without any interest.

The deposit would be refunded in the following fiscal year subject to achieving 100 per cent of the current fiscal year’s disbursement target.

The official data, however, showed that a few number of banks including a fourth generation one is not interested to disburse the agriculture loans as their commitments.

The central bank of Bangladesh earlier slashed the maximum ceiling of agriculture credit lending rate by 1.0 percentage point from 10 per cent to 9.0 per cent, considering it a priority sector.

Echoing the BB’s official, Bangladesh Krishi Bank (BKB) Managing Director Md Ali Hossain Prodhania said: “Definitely, the agriculture loan disbursement will cross the target by the end of this fiscal year like the previous years.”

The BKB is set to disabuse BDT 60 billion against its original target of BDT 50 billion by the end of FY ’19, the senior banker added.

He also said the recovery growth of farm credit is still at a satisfactory level that may enhance further by the end of this FY.

The recovery of overall farm loan grew by more than 6.0 per cent to BDT 206.55 billion during the period under the review from BDT 194.50 billion in the same period of the previous fiscal, the BB data showed.

On the other hand, non-performing loans (NPLs) in the agriculture sector dropped by more than 10 per cent in the 11 months of this fiscal as the banks strengthened their recovery drives.

The amount of classified farm loans came down to BDT 44.73 billion during the July-May period of the FY ‘19 from BDT 49.87 billion in the same period of last fiscal.

“We’ve already intensified our monitoring and supervision to speed up the recovery of loans, particularly the classified ones,” Mr. Prodhania explained.

He also said the state-owned specialised bank has asked recently its officials concerned to take necessary measures so that fresh loans do not turn into NPLs.

The share of NPLs in the total outstanding loans in the agriculture sector fell to 10.75 cent during the period under review from 12.50 per cent in the same period of the FY ‘18.

Total outstanding loans in the sector stood at BDT 416.11 billion in the 11 months of FY ’19 against BDT 399.07 billion in the same period of the previous fiscal, the BB data showed.