Play store
DHAKA: Bangladesh’s banks disbursed Tk 68.58 billion in agricultural loans in the first two months of the current fiscal year, up 42.10 per cent from Tk 48.26 billion in the same period a year earlier, according to Bangladesh Bank data.
The central bank has set an agricultural lending target of Tk 600 billion for FY2026-27, 53.85 per cent higher than the Tk 390 billion target for the previous fiscal year.
Banks disbursed Tk 68.58 billion in July and August against the new target, while agricultural loan recovery also increased. The total outstanding agricultural loan balance rose year-on-year, but overdue loans declined, according to the central bank’s Monthly Report on Agricultural and Rural Credit for August 2026.
In August alone, banks disbursed Tk 41.9964 billion in agricultural loans, up 57.98 per cent from Tk 26.5831 billion in July. The amount was also 57.17 per cent higher than the Tk 26.72 billion disbursed in August last year.
Private commercial banks and foreign commercial banks made significant contributions to the growth in agricultural lending during the first two months of the fiscal year, the report said.
Crop production accounted for 45.77 per cent of agricultural loans disbursed in July and August, while livestock and poultry farming received 31.59 per cent. Fisheries accounted for 13.23 per cent, poverty alleviation programmes 3.33 per cent and other activities 6.08 per cent.
The share of lending for crop production increased from 43.67 per cent in the same period last fiscal year, while the share for livestock and poultry farming rose from 29.33 per cent. In contrast, the fisheries sector’s share fell from 14.66 per cent.
The central bank said the increased shares for crop and livestock financing indicated a broader distribution of agricultural credit. Lending for crops was also linked to preparations for Aman rice cultivation and early winter crops.
Loan recovery increased alongside disbursement. Banks recovered Tk 38.9859 billion in agricultural loans in August, up 10.73 per cent from Tk 35.2096 billion in July and 24.96 per cent from Tk 31.1996 billion in August last year.
Total agricultural loan recovery in July and August reached Tk 74.1955 billion, compared with Tk 60.7358 billion in the same period a year earlier, representing a 22.16 per cent increase.
The report attributed the rise partly to stronger recovery by private commercial banks and state-owned commercial banks.
At the end of August, the outstanding agricultural loan balance, including interest, stood at Tk 636.2027 billion, up 6.85 per cent from Tk 595.4184 billion a year earlier.
However, overdue agricultural loans declined to Tk 219.3869 billion from Tk 229.6831 billion over the same period, a fall of 4.48 per cent. The report said a 9.67 per cent reduction in overdue loans at specialised banks helped bring down the overall amount.
Of the Tk 600 billion agricultural lending target for FY2026-27, state-owned commercial banks have been assigned Tk 69.41 billion, state-owned specialised banks Tk 135.54 billion, private commercial banks Tk 369.30 billion and foreign commercial banks Tk 25.75 billion.
Under Bangladesh Bank’s policy, banks must disburse at least 50 per cent of their assigned agricultural lending targets through their own branches and networks. They may also distribute agricultural loans through partnerships with microfinance institutions.
To support agricultural production and employment, the central bank has introduced a Tk 100 billion refinancing programme for agriculture and rural sectors. Banks can access refinancing under the programme at 3 per cent interest, down from the previous rate of 4 per cent.
The maximum interest rate charged to farmers and other borrowers has been set at 7 per cent on a simple-interest basis. The profit rate for Shariah-based financing cannot exceed 7 per cent either. Banks that misuse the funds or charge borrowers above the prescribed rate may face an additional two percentage points in penalty interest.
Bangladesh Bank has also established a separate Tk 30 billion refinancing programme to develop agriculture-based special economic zones in the northern region. The refinancing rate for banks is 3 per cent, while the maximum rate charged to borrowers is 7 per cent.
Microcredit operations also expanded in rural areas. Grameen Bank and 10 major non-governmental organisations disbursed Tk 182.8178 billion in microloans in August 2026, up 10.34 per cent from the same month last year.
These institutions recovered Tk 179.4133 billion during the month, a year-on-year increase of 12.10 per cent.
At the end of August, their combined outstanding loans stood at Tk 1,359.5767 billion, including Tk 86.9593 billion in overdue loans. Overdue loans accounted for 6.40 per cent of their total outstanding balance.
Grameen Bank, BRAC and ASA together accounted for 69.13 per cent of the total microcredit disbursed by the 11 institutions in August. Around 38 million members received microcredit services through 14,611 branches operated by the institutions.
BRAC disbursed Tk 65.4058 billion in microloans in August, followed by ASA with Tk 35.4499 billion and Grameen Bank with Tk 25.5349 billion.
Bangladesh Bank, however, stressed the need to monitor overdue microloans. Seasonal fluctuations in rural incomes, limited cash flows and rising operating costs could make it difficult for some borrowers to repay their instalments, the report said.
The Palli Karma-Sahayak Foundation (PKSF) disbursed Tk 7.2896 billion in loans in August, up 26.56 per cent from Tk 5.7596 billion in the same month last year. Its loan recovery rose 28.14 per cent to Tk 8.1337 billion from Tk 6.3473 billion.
During July and August, PKSF disbursed Tk 7.5896 billion in loans, 21.05 per cent more than in the corresponding period a year earlier. Its loan recovery during the two months reached Tk 14.3824 billion, up 33.24 per cent year-on-year.
At the end of August, PKSF’s outstanding loans stood at Tk 162.7664 billion, including Tk 1.1153 billion in overdue loans.
Bangladesh Bank said agricultural loan disbursement and recovery both recorded positive growth in the first two months of the current fiscal year. While the outstanding agricultural loan balance increased, overdue loans declined.
The central bank emphasised that expanding financing for agriculture and rural areas must go hand in hand with ensuring proper use of loans, regular repayment and careful assessment of borrowers’ repayment capacity.