Bangladesh Bank has raised banks’ agricultural and rural lending target by nearly 54 per cent for FY2026-27 to channel more credit into food production and rural businesses as the economy grapples with high inflation and weak growth.
The target has been set at Tk60,000 crore, up from Tk39,000 crore in FY2025-26.
The Tk21,000 crore increase makes farm credit a larger policy focus this year, with emphasis on reaching farmers and rural producers outside formal financial services.
State-owned commercial and specialised banks have been assigned Tk20,495 crore, while private and foreign commercial banks must provide Tk39,505 crore.
Announcing the policy on Monday, Bangladesh Bank Governor Md Mostaqur Rahman said adequate agricultural credit was essential to boost productivity.
The central bank also introduced a web-based Agricultural Credit Management Information System to improve monitoring and data quality for policy use.
The policy prioritises better identification of genuine farmers through local agriculture, fisheries and livestock offices, as well as government farmer databases.
Banks are being encouraged to reach smallholders, sharecroppers and rural entrepreneurs who have long faced barriers to formal credit.
Group-based lending has been expanded to fisheries and livestock, with relaxed limits on farmer-group membership. Banks may now lend to individuals or groups, including fish hatcheries, duck and poultry chick production, and camel rearing.
The requirement for agricultural loan passbooks has been removed, while prior central bank approval for contract farming loans has been eased.
Bangladesh Bank Agricultural Development Common Fund has been updated, alongside summaries of a Tk10,000 crore refinancing scheme and a Tk3,000 crore refinancing fund.
Climate risk has also been incorporated into the lending framework. Banks may offer crop insurance by mutual agreement, giving farmers protection against weather-related losses.
Eligible activities have been widened to include financing for organic fertiliser made from materials such as shimul root, ashwagandha, mishri dana, rosella, shatamuli, tree potato, blueberries and eggshells.
For major fruit crops, lending and harvesting calendars have been revised. Banks can finance year-round cultivation of bananas, papayas, mangoes, lemons, guavas and litchis, with repayment starting after harvest.
The changes align with Bangladesh’s use of agriculture in its inflation-control strategy. Higher output can ease food prices while supporting rural income and jobs, but that depends on credit reaching farmers in time for production cycles.
The new monitoring system is intended to track not just whether banks meet the Tk60,000 crore target, but how effectively the funds reach farmers and support production and incomes.
