Insurance industry lacks capacity for agricultural coverage: BB governor

Bangladesh Bank Governor Ahsan H Mansur has said the country’s existing insurance companies lack the capacity to operate agricultural insurance.

Speaking at a press conference on Tuesday, Mansur unveiled the new agricultural and rural credit policies and programmes.

All deputy governors, the head of the Bangladesh Financial Intelligence Unit, the chief economist, an executive director and chief executives of scheduled banks attended the event.

“I am not very enthusiastic about agricultural insurance, because our real insurance is not running,” the governor said during the briefing at the Jahangir Alam Conference Hall of the central bank’s head office.

“Agricultural insurance is risky and I don’t think our insurance companies will ever have the ability or capacity to manage it. I don’t see this possibility in the next 10 years. If they can, then most welcome, but I don’t see a future for it.”

In response to a question about whether he was discouraging agricultural insurance, Mansur said: “I have been hearing for many years that insurance will come to agriculture in Bangladesh. Where is it?

“The reality is that the skills of our country’s insurance companies, the skills that are needed to do agricultural insurance at this stage, the kind of uncertainty that exists there, and the kind of capacity to pay the kind of premiums that are needed, will not be financially viable here.”

“That is why it will be very practical to think about it,” he added.

“I want it to happen. But we have to think about the reality.”

Mansur also linked the rise in inflation in July to higher rice prices, saying the cost of nearly all other products had either fallen or remained stable.

“If rice were removed from the index, inflation would have decreased by 1 percent,” he said.

“That is why a gap has been created. If you remove one out of 100 products, the prices of the rest have decreased or stabilised. I am feeling this inflationary pressure for rice.”

He noted that the country’s reliance on imports remains, and suggested that imports could be used as a tool to stabilise prices.

He also stressed that Bangladesh Bank is monitoring whether agricultural loans are reaching farmers directly, warning that they must not be diverted to brokers.

For the 2025-26 fiscal year, Bangladesh Bank has set a target of Tk 390 billion for agricultural and rural credit distribution, an increase of 2.63 percent from last year’s Tk 380 billion.

The goal, officials said, is to boost agricultural productivity, control inflation and reduce poverty.

Of the Tk 390 billion, state-owned and specialised banks are tasked with disbursing Tk 138.8 billion, while private and foreign banks will distribute Tk 251.2 billion.

The central bank said the expanded target is aimed at ensuring food security and encouraging investment in agriculture.

The updated policy allocates 20 percent of agricultural loans to the livestock sector and 2 percent to irrigation and agricultural machinery.

It waives the CIB service charge for loans up to Tk 250,000, broadens the scope for contract farming and agent banking, and adds new crops including beetroot, black cumin, ginger, garlic, and turmeric to the list eligible for financing.

Banks have also been instructed to distribute loans based on regional production potential.

Bangladesh Bank said in a statement that it hopes the policy will help increase agricultural output, curb inflation, create jobs and strengthen the economy by ensuring adequate credit flows to rural and farming sectors.