Agri lending jumps 15% as banks beat BB’s target

Agricultural lending by Bangladesh’s banking sector rose nearly 15 percent in fiscal year 2025-26, exceeding the central bank’s annual target, driven by strong lending from specialised and private commercial banks.

Banks disbursed Tk 42,834.16 crore in agricultural and rural credit during the year, up 14.76 percent from Tk 37,326.52 crore a year earlier and equivalent to 109.83 percent of Bangladesh Bank’s Tk 39,000 crore lending target for the country’s 58 participating banks, according to the central bank’s latest agricultural and rural credit report.

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Private commercial banks accounted for the largest share of total lending at 43.15 percent, followed by specialised banks, while Islamic banks contributed 14.15 percent.

Specialised banks posted the strongest performance against their targets, disbursing Tk 12,615.57 crore, or 123.4 percent of their allocation.

State-owned commercial banks achieved 109.89 percent of their target, private commercial banks 108.05 percent and foreign commercial banks 104.05 percent.

Islamic banks were the only category to miss their target, disbursing Tk 6,059.32 crore, or 94.37 percent of the planned amount.

The report also highlighted a mismatch between policy priorities and the distribution of credit across sectors. Crop production received 47.32 percent of total lending, below the policy target of 55 percent, while livestock and poultry accounted for 26.38 percent, exceeding the 20 percent target. Fisheries and non-farm rural activities also surpassed their respective allocations.

By contrast, lending for irrigation and agricultural machinery accounted for just 0.93 percent of total disbursement, less than half the policy target of 2 percent.

Agricultural loan recovery rose 19.99 percent year-on-year to Tk 45,626.93 crore. Recoveries increased across all bank categories except Islamic banks, the report said.

Asset quality also improved overall. Overdue agricultural loans fell 8.43 percent year-on-year to Tk 19,807.33 crore at the end of June, while classified loans declined 5.92 percent to Tk 18,578.47 crore.

Foreign commercial banks more than doubled their loan recoveries from the previous fiscal year and reported no overdue or classified agricultural loans for a second consecutive year.

Bangladesh Bank said the stronger lending performance signalled a positive outlook for agricultural finance. However, it warned that the large stock of overdue and classified loans remained a key challenge, underscoring the need to prioritise loan recovery and strengthen the management of defaulted loans.