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Disbursement of agricultural loans rose notably in August of the current fiscal year, reflecting higher demand for seasonal credit amid ongoing efforts to boost rural productivity.
According to the latest data from Bangladesh Bank (BB), farm-loan disbursement stood at Tk48.26 billion during July-August of the fiscal year (FY) 2025-26, marking a 24.7 per cent year-on-year rise from Tk 38.70 billion disbursed in the same period of the FY2024-25.
In August alone, banks disbursed Tk26.72 billion in agricultural credit, compared to Tk20.80 billion in August 2024, showing a 28.4 per cent increase.
However, disbursement was lower than Tk 21.54 billion recorded in July 2025, according to the BB data.
The outstanding farm loans stood at Tk 595.41 billion in August 2025, up 6.66 per cent from Tk558.22 billion a year earlier.
Loan recovery in the sector also posted a sharp rise, reaching Tk 31.19 billion in August 2025 against Tk 29.11 billion in the same month of 2024 - a jump of nearly 7.2 per cent.
Stakeholders said the rise in agricultural loan disbursement reflects farmers' growing need for institutional credit amid higher input costs and expanding cultivation areas.
They also noted that banks have become more proactive in reaching rural borrowers following the central bank's renewed emphasis on agricultural financing.
They, however, cautioned that the increased lending should be accompanied by improved monitoring and technical support to ensure productive use of the funds.
They also stressed the importance of expanding access for small and marginal farmers, who still rely heavily on informal credit sources.
About 5.52 per cent of the target for agricultural credit disbursement has been achieved in July, FY26, according to the BB.
BB has set an agricultural and rural loan disbursement target of Tk390 billion for the fiscal year 2025-26 (FY26), which is 2.63 per cent higher than the last fiscal year's Tk 380 billion.
Dr Masrur Reaz, chairman of the Policy Exchange Bangladesh, said the rising farm credit reflects a combination of factors - including higher input costs, banks' improved outreach, and better repayment behaviour among rural borrowers.
"While the increase in agricultural lending is encouraging, the focus should now shift to ensuring that credit reaches smallholders and marginal farmers who remain underserved," Dr. Reaz noted. "Productivity-linked and climate-resilient lending models are also essential, as climate impacts continue to threaten rural livelihoods."
Bankers attributed the steady growth in disbursement and recovery to the central bank's close monitoring and farmers' increased demand for credit to meet production costs ahead of the Aman and winter crop seasons.
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