The agricultural credit growth in Bangladesh is progressing steadily, with banks disbursing approximately 50.57 per cent of the fiscal target within the first seven months of the financial year, according to the latest update from Bangladesh Bank.
Steady Growth in Loan Disbursement
From July 2024 to January 2025, scheduled banks disbursed Tk 192.15 billion in agricultural and rural credit under the current fiscal year’s target. The central bank had set an ambitious goal of Tk 380 billion for FY2024-25 to bolster food production and sustain agricultural development.
While the majority of banks have actively participated in the disbursement process, two banks—Padma Bank from the private sector and foreign-owned Woori Bank—failed to distribute any loans during this period. Additionally, three other banks—Madhumoti Bank, Union Bank, and HSBC—disbursed less than 10 per cent of their respective targets.
Performance of Banks
- Union Bank, which had a target of Tk 1 billion, disbursed only Tk 48.9 million, equating to 4.89 per cent of its target.
- Madhumoti Bank aimed to distribute Tk 330 million but managed to disburse only Tk 25 million, or 7.58 per cent.
- HSBC Bank, with a target of Tk 2.85 billion, provided Tk 250 million, equalling 8.77 per cent of its commitment.
- First Security Islami Bank, a Sharia-based institution, disbursed 10.59 per cent of its target.
Government Regulations and Sectoral Allocations
To ensure food security and financial accessibility for farmers, the government has mandated that all commercial banks allocate at least 2 per cent of their total loans to the agricultural sector. Bangladesh Bank has also introduced a penalty system for non-compliance with loan disbursement targets.
According to Bangladesh Bank, at least 13 per cent of the target loan should be allocated to the fisheries sector. As of January 2025, Tk 17.15 billion has been disbursed to this sector, accounting for 14.33 per cent of the total agricultural credit distributed.
Similarly, the livestock sector must receive at least 15 per cent of the allocated credit. During the review period, Tk 46.64 billion was disbursed to livestock and poultry, representing 12.27 per cent of the total target.
Credit Disbursement Across Different Sectors
- Poverty alleviation programmes received Tk 7.31 billion.
- Crop sector loans amounted to Tk 91.01 billion.
- Agricultural machinery purchases accounted for Tk 1.48 billion.
- Irrigation machinery procurement received Tk 1.36 billion.
- Grain storage and marketing received Tk 670 million.
- Fish farming initiatives secured Tk 29.10 billion.
Future Outlook
With over half of the fiscal target already met within seven months, Bangladesh’s agricultural sector continues to benefit from sustained financial support. However, ensuring wider participation from all banks remains crucial to achieving full financial inclusion in rural and farming communities. Experts highlight the need for enhanced monitoring, increased incentives for financial institutions, and more streamlined lending processes to maximise the impact of these agricultural loans.