A file photo shows farmers separating jute fibres from stalks in a water body on the outskirts of Dhaka. The Bangladesh Bank has raised the farm loan disbursement target for the country’s banks by 8.99 per cent to Tk 26,292 crore for the fiscal year 2020-21 though the banks failed to achieve the last fiscal year’s target. — New Age photo

The Bangladesh Bank has raised the farm loan disbursement target for the country’s banks by 8.99 per cent to Tk 26,292 crore for the fiscal year 2020-21 though the banks failed to achieve the last fiscal year’s target.

The central bank announced its annual agricultural and rural credit policy and programme on its web site on Wednesday.

The scheduled banks disbursed Tk 22,749 crore as farm loans in the last fiscal year, which is 5.70 per cent or Tk 1,375 crore less than the target of Tk 24,124 crore.

The country’s banks had failed to achieve the farm loan disbursement target in the last fiscal year for the first time since the start of target setting by the central bank for disbursement due to a halt in economic activities amid the coronavirus outbreak, said BB executive director Ashok Kumar Dey.

The central bank eased the rules regarding minimum agricultural credit disbursement for the private commercial banks and foreign banks for the current fiscal year.

The scheduled banks must disburse minimum 2 per cent of their total loans and advances to the agriculture sector. The requirement was 2.5 per cent in the last fiscal year.

The central bank has made the decision considering the capacity of the banks and shortage of branches, said BB officials.

If the banks fail to achieve the target of farm loan disbursement in spite of the relaxation, they must keep 3 per cent of the unachieved target amount with the BB, the policy reads.

The BB will not provide the banks any interest for the reserved amount, it said.

The central bank asked the banks to reduce dependency on microfinance institutions and to emphasise their own network for disbursing loans to the farm sector.

Minimum 60 per cent of the farm loans would be released for crop production, according to the policy.

The BB has made it mandatory for all banks to disburse at least 10 per cent of their annual farm loan targets to the fisheries sector and 10 per cent to the livestock sector in the period.

A total of 30.66 lakh borrowers got the farm credit in the last 2019-20 fiscal year, according to the central bank data.

Of the total borrowers, women were 15.14 lakh who received Tk 8,359.93 crore.

Around 23.64 lakh small and marginal farmers received Tk 16,250 crore from the banking sector in the period.

The interest rate for farm loans under the agricultural and rural loan policy has been set at maximum 9 per cent.

The BB asked banks to disburse loans following an area approach method that means looking for good harvesting areas.

Besides, it also asked to give priority to the backward areas while disbursing farm loans.

The new policy emphasise providing loans for seed production and sales, goat rearing, sheep and cattle fattening and Turkey bird rearing.

The policy also said that women and high-valued crop sectors would get priority in receiving farm credit.

The BB on April 13 launched a Tk 5,000-crore special refinance scheme for the country’s agricultural sector with 4 per cent interest rate.

The banks must have to disburse loans under the scheme to the farmers by September 30 and apply for the refinance on monthly basis, the policy said.

The country’s banks disbursed farm loans worth Tk 23,616 crore in FY19, Tk 21,393 crore in FY18, Tk 17,244.69 crore in FY17, Tk 17,056.43 crore in FY16 and Tk 15,978.46 crore in FY15.