Classified loans in the agriculture sector increased slightly in the five months to November, notwithstanding close monitoring by the central bank, official said.
The amount of non-performing loans (NPLs) lent out to farmers rose by more than 2.0 per cent or Tk 1.08 billion to Tk 51.70 billion during the July-November period of the fiscal year (FY) 2018-19 from Tk 50.61 billion in the same period last fiscal.
"It's a seasonal effect," a senior official at the Bangladesh Bank (BB) told the FE on Sunday, explaining the overall situation on the farm credits.
The central banker also expected the volume of such default loans to decrease in the coming months as it has relaxed rescheduling policy on short-term agriculture loans.
Earlier on December 17, the BB issued a fresh rescheduling policy on short-term agriculture loans aiming to boost farm production.
Under the policy, the banks are allowed to reschedule such agriculture loans under 'banker-client' relationship through the relaxation of down payment.
In some cases, such loans can be rescheduled even without any down payment, it added.
Such a rescheduled facility will continue until December, 2019.
The share of NPLs in the total outstanding loans in the agriculture sector rose to 13.05 cent in the first five months of this fiscal from 12.88 per cent in the same period of the FY 18.
Total outstanding loans in the sector stood at Tk 396.06 billion during the period under review against Tk 392.86 billion in the same period of the previous fiscal, according to the central bank's latest statistics.
On the other hand, agriculture loans disbursement dropped by more than 9.0 per cent or Tk 7.55 billion to Tk 74.76 billion in the five months of the FY 19 from Tk 82.31 billion in the same period of the previous fiscal.
Of the Tk 74.76 billion, eight public banks disbursed Tk 36.68 billion, and the remaining Tk 38.07 billion was disbursed by the private commercial banks (PCBs) and foreign commercial banks (FCBs).
All banks have achieved more than 34.29 per cent of their annual agricultural loan disbursement target for FY 19. The target has been fixed at Tk 218 billion.
The recovery of farm loans, however, rose to Tk 84.79 billion during the July-November period of FY 19 from Tk 81.43 billion in the same period of the previous fiscal.
Talking to the FE, Bangladesh Krishi Bank (BKB) Managing Director Ali Hossain Prodhania said both disbursement and recovery of farm credits may increase from January 2019.
"The disbursement of farm credits has decreased slightly in recent months due to the impact of national polls," the senior banker explained.
Echoing the BB official, Mr. Prodhania said the NPLs in the agriculture sector is likely to fall in the near future following relaxation of rescheduling policy on short-term agriculture loans by the central bank.
