[🇧🇩] Farm Loans and our Farmers

[Saif]

Date of Event: Jun 16, 2025

Source: https://www.thedailystar.net/business/news/farm-loan-disbursement-rises-april-3917751

Farm loan disbursement rises in April

Disbursement of agricultural credit by scheduled banks surged significantly month-on-month in April, although it was slightly lower than that in the corresponding period of last year.

According to a report by the Bangladesh Bank, banks disbursed a total of Tk 3,239 crore in agricultural loans during the month.

This was an increase of 18.45 percent from the Tk 2,734 crore disbursed in March 2025.

However, this figure was 5.74 percent lower compared to the Tk 3,436 crore disbursed in April of the previous year.

There was also a notable improvement in loan recovery, with scheduled banks recovering Tk 3,362 crore in April 2025, which is 11.36 percent higher than the Tk 3,019 crore recovered in March.

Despite this monthly gain, the amount recovered was 4.97 percent lower than the Tk 3,538 crore recovered during the same month last year.

The outstanding balance of agri credit, including interest, stood at Tk 57,153 crore at the end of April this year.

This represents a 1.18 percent rise compared to the Tk 56,487 crore recorded at the end of April 2024.

Meanwhile, overdue agricultural loans reached Tk 9,992 crore at the end of April this year, showing a very marginal decline of 0.02 percent from Tk 9,994 crore in the same month of the previous year.

The Bangladesh Bank attributed this slight improvement in overdue loans mainly to lower defaults by state-owned commercial banks during the period under review.

In the microfinance sector, disbursement and recovery also showed robust growth.

Grameen Bank, along with 10 large non-governmental organisations, collectively disbursed Tk 14,716 crore as microcredit in April of the current fiscal year, which is a 20.22 percent increase compared to the same month a year earlier.

Their loan recovery amounted to Tk 14,910 crore, reflecting a 7.75 percent rise from April last year.

At the end of April 2025, the outstanding microcredit balance for these institutions stood at Tk 120,407 crore.

Overdue loans in this segment totalled Tk 8,229 crore, representing 6.84 percent of the total outstanding microcredit balance.​

 

[Saif]

Agri loan waiver and the questions it raises

The government's decision to waive agricultural loans of up to Tk 10,000 along with accrued interest for 1.2 million farmers is a welcome move to ease the burden on a vulnerable segment of the population. Small and marginal farmers usually operate with very little margin for error. They face unpred

thefinancialexpress.com.bd

Agri loan waiver and the questions it raises

FE
Published :
Mar 01, 2026 00:07
Updated :
Mar 01, 2026 00:07

The government's decision to waive agricultural loans of up to Tk 10,000 along with accrued interest for 1.2 million farmers is a welcome move to ease the burden on a vulnerable segment of the population. Small and marginal farmers usually operate with very little margin for error. They face unpredictable challenges from weather, pests and price swings, all of which can easily trap them in debt. In this context, reducing part of their financial burden makes sense not just on humanitarian grounds but also economically. Freed from the pressure of repayment, farmers can reinvest in seeds, irrigation and other essentials that boost productivity. That, in turn, strengthens food security and keeps rural communities stable. It may also help restore their credit standing, making it easier to return to formal banking instead of turning to informal lenders who often charge exorbitant rates.

The effectiveness of such a policy, however, depends on how well it is designed and carried out. One recurring problem in Bangladesh has been the difficulty of identifying the right beneficiaries in social safety net programmes. With this waiver now public, there is a concern that people who are not genuine farmers will present themselves as borrowers in order to access benefits. A loan waiver can also create the wrong kind of incentive, encouraging some to take agricultural loans in the hope that these will eventually be written off. Without strong verification, there is a real danger that the programme will be captured by those it was not meant to serve, reducing its impact on genuine farmers. This is why the authorities need to rely on credible databases, careful scrutiny at the local level and digital tracking of agricultural activities to ensure that only those who till the land and depend on agriculture for their livelihood are the ones who gain from this scheme. Otherwise, it could end up being a windfall for fraudulent borrowers while doing little to change the reality of the marginal farmer.

A further question arises from the decision to extend the waiver across the board rather than focusing on those in the most acute distress. Not all farmers carry the same level of debt, and a uniform waiver risks subsidising those who are relatively better off while diverting resources away from those who need support the most. This kind of blanket approach overlooks the fact that many small farmers repay their debts and also fails to distinguish responsible borrowers from those who default due to hardship.This concern takes on added weight given the wider fiscal pressures the government is currently facing. Debt obligations are rising, with external repayments set to increase in the current and coming fiscal years. Domestic borrowing has also grown as well, adding to the strain on public finances. In effect, when the government waives loans, the liability does not disappear but is effectively transferred to the state which must compensate the banks.

There are also longer-term considerations that cannot be ignored. Frequent loan waivers can weaken credit discipline by creating an expectation that debts will eventually be forgiven, which in turn can discourage timely repayment and undermine the financial health of banks. Lenders may respond by becoming more cautious, potentially restricting access to credit for the very farmers the policy aims to support. There is no doubt that a loan waiver can provide temporary respite. But without a robust ecosystem of fair pricing, modern technology and reliable access to finance that empowers farmers to stand on their own feet, its benefits may prove short lived while its fiscal costs linger.​