BB Mandates At Least 4 Percent Credit Distribution in Agriculture

The Bangladesh Bank (BB) has raised the agricultural credit disbursement target for the current fiscal year by nearly 54 percent to Tk 60,000 crore, while making it mandatory for commercial banks to channel at least 4 percent of their total loans into the agricultural sector, up from the previous requirement of 2.5 percent. In the preceding fiscal year, the agricultural credit target stood at Tk 39,000 crore.

Deputy Governor Dr. Md. Habibur Rahman announced the new agricultural and rural credit policy during a press conference at the central bank on Monday (August 17).

Under the updated policy, out of the total Tk 60,000 crore target, state-owned commercial and specialized banks have been assigned a disbursement target of Tk 20,495 crore, while private and foreign banks are mandated to distribute Tk 39,505 crore. The central bank stated that the core objectives of the initiative are to ensure adequate credit flow to boost agricultural production and control inflation, alongside the launch of a web-based Agri-Credit MIS software to strengthen monitoring.

The new policy introduces several measures to ease loan accessibility. For fisheries and livestock loans up to Tk 5 lakh, borrowers can now utilize personal, social, or group guarantees instead of conventional immovable property collateral, a step aimed at facilitating access for women and marginalized farmers. Group-based lending has also been expanded to cover various income-generating rural activities alongside crop, grain, and fisheries sectors, with relaxed limits on group member counts.

Several emerging sectors have been brought under the agricultural loan umbrella, including hatchery-based fish and poultry chick production, camel farming, blueberry cultivation, shimul mul (Asparagus racemosus) and ashwagandha production, and organic fertilizer manufacturing using eggshells. To accurately identify genuine farmers, the central bank will accept certifications from local agriculture, fisheries, or livestock officers, or official "farmer cards," while the previous obligation of possessing a passbook for obtaining loans has been lifted. Additionally, provisions have been added to bring farmers under insurance coverage based on mutual agreement between banks and customers to tackle climate change risks.

The central bank expressed optimism that the new policy will play a pivotal role in expanding agricultural financing, alleviating poverty, creating employment, and maintaining overall macroeconomic stability.