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Bangladesh Bank has set a target of Tk 60,000 crore for agricultural loan disbursement in the current fiscal year (FY27), up 53.85 per cent from the target of Tk 39,000 crore in the previous fiscal year.
Banks disbursed Tk 6,857.95 crore in agricultural loans in July and August, the first two months of FY27, compared with Tk 4,826.03 crore in the same period of FY26, marking a year-on-year increase of 42.10 per cent.
According to Bangladesh Bank’s monthly report on agricultural and rural credit for August 2026, both agricultural loan disbursement and recovery increased during the period. While outstanding agricultural loans rose, overdue loans declined.
In FY26, banks disbursed Tk 42,834.16 crore in farm loans against a target of Tk 39,000 crore.
In August this year, agricultural loan disbursement stood at Tk 4,199.64 crore, up from Tk 2,658.31 crore in July, registering a month-on-month increase of 57.98 per cent.
Disbursement in August was also 57.17 per cent higher than Tk 2,672 crore recorded in the same month last year.
Private commercial banks and foreign commercial banks made significant contributions to the growth in agricultural lending during the first two months of FY27, the report said.
Crop and livestock sectors dominate lending
Crop production and livestock and poultry farming accounted for the largest shares of agricultural loans during July-August.
Of the total agricultural loans disbursed during the period, 45.77 per cent went to crop production and 31.59 per cent to livestock and poultry farming.
Fisheries received 13.23 per cent, poverty alleviation programmes 3.33 per cent and other sectors 6.08 per cent.
In the same period of the previous fiscal year, crops accounted for 43.67 per cent of agricultural lending, livestock and poultry farming 29.33 per cent and fisheries 14.66 per cent.
The share of lending to crop production increased by 2.10 percentage points, while that of livestock and poultry farming rose by 2.26 percentage points. The fisheries sector’s share declined by 1.43 percentage points.
The central bank said the rising share of loans to crops and livestock indicated a broader distribution of financing across agricultural activities. The trend was also linked to preparations for Aman rice cultivation and early winter crops.
Loan recovery and overdue loans
Agricultural loan recovery also recorded growth.
Banks recovered Tk 3,898.59 crore in agricultural loans in August, up 10.73 per cent from Tk 3,520.96 crore in July.
Recovery was 24.96 per cent higher than Tk 3,119.96 crore in August last year.
During July-August, total agricultural loan recovery reached Tk 7,419.55 crore, compared with Tk 6,073.58 crore in the corresponding period of FY26, registering a growth of 22.16 per cent.
Increased recovery by private commercial banks, alongside state-owned commercial banks, contributed to the growth, the report said.
Outstanding agricultural loans, including interest, stood at Tk 63,620.27 crore at the end of August, up 6.85 per cent from Tk 59,541.84 crore a year earlier.
However, overdue agricultural loans declined to Tk 21,938.69 crore in August from Tk 22,968.31 crore in the same month last year, marking a fall of 4.48 per cent.
The central bank attributed the decline in overall overdue agricultural loans partly to a 9.67 per cent reduction in overdue loans at specialised banks.
Bank-wise lending targets
Of the Tk 60,000 crore agricultural credit target for FY27, state-owned commercial banks have been assigned Tk 6,941 crore, while state-owned specialised banks have a target of Tk 13,554 crore.
Private commercial banks have been given a target of Tk 36,930 crore, and foreign commercial banks Tk 2,575 crore.
Under Bangladesh Bank’s policy, banks must disburse at least 50 per cent of their assigned targets through their own branches and networks. They may also channel agricultural loans through microfinance institutions.
Refinance support for agriculture
To boost agricultural production and employment, Bangladesh Bank has established a Tk 10,000 crore refinancing programme for the agriculture and rural sectors.
Under the programme, banks can obtain refinancing at 3 per cent interest, down from the previous rate of 4 per cent.
The maximum interest rate for farmers and other borrowers has been set at 7 per cent under the simple-interest method. The profit rate for Shariah-based financing cannot exceed 7 per cent.
Banks may face an additional 2 per cent penal interest for misuse of funds or charging borrowers interest or profit above the prescribed limit.
The central bank has also introduced another Tk 3,000 crore refinancing programme to develop agriculture-based special economic zones in the northern region.
The refinancing rate for banks under the programme is 3 per cent, while the maximum interest or profit rate at the borrower level is 7 per cent.
Microfinance expands in rural areas
Microfinance activities have also expanded alongside agricultural lending.
Grameen Bank and 10 major private non-governmental organisations disbursed Tk 18,281.78 crore in microcredit in August 2026, up 10.34 per cent from the same month a year earlier, according to the report.
The institutions recovered Tk 17,941.33 crore during the month, a year-on-year increase of 12.10 per cent.
Their combined outstanding loans stood at Tk 1,35,957.67 crore at the end of August, including overdue loans of Tk 8,695.93 crore, equivalent to 6.40 per cent of the total outstanding amount.
Grameen Bank, BRAC and ASA together accounted for 69.13 per cent of total microcredit disbursement in August.
Around 38 million members received microcredit through 14,611 branches operated by the 11 institutions.
BRAC disbursed Tk 6,540.58 crore in August, followed by ASA with Tk 3,544.99 crore and Grameen Bank with Tk 2,553.49 crore.
Bangladesh Bank stressed the need to monitor overdue microfinance loans, noting that seasonal fluctuations in rural incomes, cash-flow constraints and rising operating costs could make it difficult for some borrowers to repay instalments.
PKSF lending rises
The Palli Karma-Sahayak Foundation (PKSF) disbursed Tk 728.96 crore in loans in August, up 26.56 per cent from Tk 575.96 crore in the same month last year.
Its loan recovery rose 28.14 per cent year-on-year to Tk 813.37 crore in August, from Tk 634.73 crore.
During July-August, PKSF’s loan disbursement totalled Tk 758.96 crore, up 21.05 per cent from the same period of the previous fiscal year.
Loan recovery during the two months reached Tk 1,438.24 crore, a year-on-year increase of 33.24 per cent.
PKSF’s outstanding loans stood at Tk 16,276.64 crore at the end of August, of which Tk 111.53 crore was overdue.
The central bank said agricultural lending and recovery both showed positive growth in the first two months of FY27, while the overdue agricultural loan burden declined despite an increase in total outstanding credit.
It emphasised the need to ensure proper use of loans, maintain regular recovery and assess borrowers’ repayment capacity as financing expands across agriculture and the rural economy.
