Contribution of Banks on Agricultural Development in Bangladesh through

Loan Disbursement

Introduction
The rural economy in Bangladesh depends on agriculture which considered as the life-blood of the
country’s economy. Commercial banks play an important role in accelerating the development of an
economy. Country’s development is not possible to achieve without the development of the
agriculture sector. The instability in food production throughout the world is due to different natural
calamities, and the special interest of developed nation in producing bio-fuel using crops and
protectionist policy adopted by many former food exporting countries created a situation of urgency
on ensuring food security ourselves through investment in the agriculture sector. Sufficient and
timely supply of agricultural inputs including agricultural credit is necessary for ensuring more
agricultural production. Agricultural credit refers to short-term, intermediate term and long term
credit disbursed to meet the specific financial needs of farmers which are determined by planting,
harvesting & marketing cycles. Short-term loans are provided for seasonal agricultural production
activities, long term loans are provided for purchasing of irrigation equipment, agricultural
machinery, livestock, horticulture, fisheries and establishment of agro based industries etc. Another
way it can be said that agricultural credit refers to the amount of money that the farmers borrow to
meet their production requirements as well as their current consumption needs. At present,
agricultural credit has turned as an essential input in agricultural development. For ensuring more
agricultural production, it requires huge capital investment for purchasing improved agricultural
inputs.

The Contribution of Banks on Agricultural Development through loan

disbursement in Bangladesh:
Agriculture is one of the most important priority sectors of Bangladesh economy. It is also the main
source of rural employment generation of the country. Besides, agriculture sector has been playing
an important role in ensuring food security, meet up the nutrition demand, increase export earnings,
and as a whole in the augmentation of total internal production of the country. In line with the
government priority ‘Agricultural and rural credit policy and programme’ is being implemented by
Bangladesh Bank to ensure adequate flow of agricultural and rural credit properly, timely, in easier
and hassle freeway at the farmers level. With a view to improving the socio-economic condition of
the country along with an underscored role of the agriculture and rural sector, all scheduled banks
have engaged in implementation of agricultural and rural credit policy and program.
The commercial banks working in Bangladesh are disbursed the agricultural loan in the following
sectors:
1. Crops / food grains (other than tea)
2. Purchase and installation of Irrigation Equipment
3. Livestock
4. Marketing of Agricultural goods
5. Fisheries
6. Poverty alleviation and income generating activities
7. Other agricultural activities

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 Comparison of Disbursement of Agricultural Loan by Commercial Banks

Table 1: Comparative Statement of Disbursement of Agricultural Loan by Commercial Banks (Billion Taka)
Disbursement FY 14 FY 15 FY 16 FY 17 FY 18 Total
Crops / food grains (other than tea) 71.31 76.04 86.95 100.61 103.37 438.28
Purchase and installation of Irrigation Equipment 2.39 2.38 2.60 3.01 2.74 13.12
Livestock 19.96 20.57 26.14 30.57 30.58 127.82
Marketing of Agricultural goods 1.67 1.54 1.09 1.14 1.14 6.58
Fisheries 13.78 16.53 19.85 24.13 24.64 98.93
Poverty alleviation and income generating activities 18.64 14.81 15.59 18.85 21.50 89.39
Other agricultural activities 32.62 27.91 24.24 31.68 29.96 146.41
Total Disbursement 160.37 159.78 176.46 209.99 213.93 920.53
Source: Agricultural credit and financial inclusion department, Bangladesh Bank

(N.B. please add data of FY 2019 and calculate from FY 14 to FY 19 for all sectors)

1. Crops / food grains (other than tea)

Table 2. Disbursement of loan on Crops Production (Amount in billion Taka)

Total FY 14 FY 15 FY 16 FY 17 FY 18
Amount % Amount % Amount % Amount % Amount %
Crops 438.28 71.31 16.27 76.04 17.35 86.95 19.84 100.61 22.96 103.37 23.59
/ food
grains
(other
than
tea)

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 Disbursement of loan on Crops Production
120
100.61 103.37

(Amount in billion Taka)

100 86.95
71.31 76.04
80
60
40
20
0
FY 14 FY 15 FY 16 FY 17 FY 18
Year

Figure 1: Bar diagram for Disbursement of loan on Crops Production

Percentage of loan disbursement on Crops Production

16% FY 14
24%
FY 15
17% FY 16
23% FY 17
20% FY 18

Figure 2: Pie Chart for Disbursement of loan on Crops Production

2. Purchase and installation of Irrigation Equipment

3. Livestock

4. Marketing of Agricultural goods

5. Fisheries

6. Poverty alleviation and income generating activities

7. Other agricultural activities

Conclusion
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