Farm loan disbursement drops, default rises in 10 months

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Defaulted loan in the agriculture sector increased by 3.10 per cent in the first 10 months of the current financial year 2014-15 compared with that of corresponding period of the FY14 while farm loan disbursement decreased by 5.71 per cent as the recent political unrest disrupted marketing of agricultural products.

According to the latest Bangladesh Bank data, the defaulted loans in the farm sector rose to Tk 6,660.24 crore in July-April of the FY15 from that of Tk 6,459.59 crore in the same period a year ago.

A large number of farmers failed to repay their loans mainly in the first quarter of this year as they counted losses for failure in supplying their products to Upazila and district headquarters and to metropolitan cities due to a countrywide nonstop blockade along with spells of general strikes enforced by the BNP-led alliance, a BB official told New Age on Thursday.

He said that the defaulted farm loans had decreased significantly in the first quarter of FY15 due to an eased political situation in the period. The defaulted loans in agriculture sector were Tk 6,006.80 crore as of September 30, 2014.
The farm sector defaulted loans accounted for 21.64 per cent of the total loans (Tk 30,775 crore) disbursed in the sector as of April 30, 2015.

The classified loans in the sector were 19.53 per cent of the total loans (Tk 33,071.10 crore) disbursed as of April 30 last year.

Seven state-run banks — Sonali, Janata, Agrani, Rupali, Bangladesh Krishi, Rajshahi Krishi Unnayan and BASIC banks — held the majority shares of the defaulted farm loans.

The farm sector defaulted loans in the seven state-run banks increased by 2.88 per cent to Tk 6,570.93 crore as of April 30, 2015 from Tk 6,386.51 crore as of April 30, 2014.

The farm sector defaulted loans in the seven banks stood at 26.54 per cent of the total loans amounting to Tk 24,760.12 crore disbursed by the banks to the sector as of April 30, 2015.

The agriculture sector defaulted loans in the private and foreign commercial banks increased by 22.20 per cent to Tk 89.31 crore as of April 30, 2015 from Tk 73.08 crore as of April 30, 2014.

The sector’s defaulted loans in the PCBs and the FCBs stood at 1.48 per cent of their total loans amounting to Tk 5,089.81 crore disbursed to the sector as of April 30, 2015.

The BB official said that the state-run banks held larger amount of the agriculture defaulted loans than those of the PCBs and the FCBs as the state-run banks usually disbursed the majority of the agriculture loans in the banking sector.

The political unrest also put an adverse impact on the farm loan disbursement as it (farm loan disbursement) decreased by 5.71 per cent in the first 10 months of FY15 compared with that in the same period of FY14.

The farmers are now reluctant to receive farm loans as they are not getting fair prices of their products due to political uncertainty, the central bank official said.
The farm loan disbursement by all scheduled banks decreased to Tk 12,770.29 crore in July-April of the FY15 from that of Tk 13,741.97 crore in the same period of FY14.

The BB official said that the defaulted loans in the agriculture sector would increase further in the coming months along with a declining trend in loan disbursement if the political stalemate persists.

Prices of most of the farm products declined significantly at the Upazila level during January to March of this year as the farmers failed to supply the products to the district headquarters and the metropolitan cities due to a setback in the transportation system amid the ongoing political crisis, he added.