Farm loan disbursement plunges by 60pc in April-May period
DOT Desk:  Farm loan disbursement plunges by 60pc in April-May period, reports Daily Observer.
 Farm loan disbursement by banks dropped by 60 per cent or Tk 2,442.99 crore in April-May period this year compared to the amount in the same period of last year, mainly due to coronavirus outbreak induced disruptions.  Banks are likely to miss for the first time the farm loan disbursement target set by Bangladesh Bank for the fiscal year 2019-2020. The first coronavirus cases were detected in the country on March 8 this year, prompting the government to announce general holidays and restrictions on movement.
 The country went into holidays for around two months starting on March 29 and ending on May 30, leaving credit operations of the banks and non-governmental organisations, also known as microfinance entities, almost suspended. So, credit disbursement to agriculture sector dropped to Tk 1,628.74 crore in April-May this year from Tk 4,071.73 crore in the same period last year.
In April and May, banks and NGOs disbursed only Tk 496.63 crore and Tk 1,132.11 crore respectively in farm loans.
In last year’s April and May, disbursement was Tk 2,261.51 crore and Tk 1810.22 crore respectively. The disbursement dropped by 78.04 per cent in April and by 37.46 per cent in May.
As a result, the disbursement of farm loans dropped by 8.78 per cent, or Tk 1,785.12 crore, to Tk 18,550.6 crore in July-May of fiscal 2019-2020 against the disbursement of Tk 20,335.72 crore in the same period in last fiscal.
The dismal loan disbursement by banks might be the reason for the fall in credit to farmers, bankers said. The private sector credit growth dropped to a record low of 8.82 per cent in April this year as the country’s local and international trade was virtually closed shutdown.
Credit disbursement to private sector was far below from BB projected rate of 14.8 per cent in FY20. Besides, poor state of loan recovery from all sectors during the pandemic period has caused liquidity crunch for banks resulting in a plunge in loan disbursement.
The central bank set farm loan disbursement target of Tk 24,124 crore in FY20, raising the target by 10.66 per cent from the Tk 21,800 crore target set for FY19. However, farm loan disbursement in the first eleven months of FY20 was far below BB set annual target.
It resulted into a gap of 30.04 per cent or Tk 5,573.4 crore between the disbursement and the target and it would be difficult to make up in one month period.
Although farmers are able to get loans due to BB-set policy, the rate of interest imposed on them remains a major concern.