Overdue farm loans surge

Agricultural credit disbursement increased strongly in the early months of fiscal year (FY) 2025-26, but a sharp rise in overdue loans raised concerns over credit recovery.

Data from the Bangladesh Bank (BB) showed that at the end of November 2025, overdues of agricultural credit given by banks surged 91.12 percent year-on-year to Tk 22,297 crore from Tk 11,667 crore a year earlier, owing to a rise in overdues of state-owned specialised banks and private banks.

The loan classification criteria that became effective from April 2025 also contributed to this significant rise in overdues, according to BB’s latest monthly report on agriculture and rural finance published last week.

During this period, the overdue balance of state commercial banks declined, but the drop was not significant enough to offset the overall increase.

“The rise in overdue loans signals growing concerns over credit recovery and the requirement for stronger oversight and risk management to address credit recovery challenges in the sector,” said the report.

Agricultural credit recovery by all banks grew 2.13 percent year-on-year to Tk 3,826 crore in November 2025 from a year earlier. The recovery increased by 11 percent from October, the BB said.

At the end of November, the total outstanding balance, including interest, of agricultural credit for all banks stood at Tk 60,718 crore, reflecting a 10.78 percent increase from a year ago.

In terms of disbursement, all scheduled banks lent 23 percent more loans, amounting to Tk 16,092 crore during July-November of the fiscal year (FY) 2025-26, up from Tk 13,081 crore during the same period a year ago.

The significant rise was primarily driven by higher disbursements of foreign banks and state commercial banks, while specialised banks recorded lower disbursements, according to the report.

During July-November of FY26, the composition of agricultural credit disbursement shifted modestly toward crops, livestock and poultry. In contrast, the share allocated to fisheries and other sectors declined.

“The shift of agricultural credit toward crops, livestock and poultry indicates a stronger focus on core agricultural production.”

“Overall, the data reflects a gradual reorientation of agricultural credit toward core production activities from social welfare, suggesting limited progress in expanding targeted financing for vulnerable groups,” it added.

For the current FY26, the BB had earlier set a target to disburse Tk 39,000 crore in loans by banks, which is 4.48 percent higher than the actual disbursement of the previous year.