Agricultural loan disbursement in Bangladesh fell sharply in the last six months of 2024, but loan recovery improved during the same period, according to the Bangladesh Bank’s latest report on agriculture and rural finance.

Total agri-loan disbursement declined by 11.28% year-on-year to Tk 162.59 billion due to reduced lending from private and foreign commercial banks, which are the primary sources of such credit. The steepest decline was recorded in August and September, though disbursement showed signs of recovery in November and December.

For FY25, the government set an agricultural loan disbursement target of Tk 38,000 crore, slightly higher than the previous year’s actual disbursement of Tk 371.54 billion.

While private commercial banks were expected to contribute the most, they reduced lending by 20%. Foreign commercial banks cut their disbursement by 67.16%, and state-owned specialised banks also decreased lending. However, state-owned commercial banks increased their disbursement by 58.86%, though not enough to offset the overall decline.

Experts attribute the fall in disbursement to political instability and floods. Mustafa K Mujeri, executive director of the Institute for Inclusive Finance and Development, highlighted concerns for farmers ahead of the Boro season, which accounts for over half of the country’s rice production.

Loan recovery, however, improved, rising 7.52% year-on-year to Tk 191.17 billion. While state-owned and private banks led the increase, foreign and specialised banks saw repayment declines.

Despite stable outstanding agricultural credit, overdue loans surged by 43.49% to Tk 116 billion in December, raising concerns about future lending risks.