Banks in Bangladesh disbursed Tk3,120 crore in agricultural credit in February, reflecting a 7.21 per cent increase from Tk2,911 crore year on year, according to Bangladesh Bank data.
Recovery of agricultural loans stood at Tk2,847 crore, up 7.60 per cent from Tk2,646 crore in the same period last year.
By the end of February, the outstanding agricultural credit balance of all scheduled banks rose to Tk63,723 crore, marking an 11.66 per cent increase from Tk57,067 crore a year earlier.
However, overdue agricultural loans saw a steep rise, reaching Tk22,916 crore, an increase of 123.90 per cent compared to Tk10,235 crore in February 2025.
Bangladesh Bank attributed the sharp rise mainly to higher overdue loans in state-owned specialised banks, state-owned commercial banks, and private commercial banks.
Sher-e-Bangla Agricultural University Department of Agricultural Economics Chairman Md Rakibur Rahman said the sector is facing structural constraints due to highly fragmented landholdings, which limit farmers’ ability to secure better prices.
“Natural disasters also reduce crop yields, which in turn affects farmers’ repayment capacity,” he told TIMES. “To reduce defaulting loans, we need to make crop insurance effective,” he said, adding that it would benefit farmers and help lower loan defaults.
He said better prices and economic security would encourage more young people to engage in agriculture. In the microfinance sector, Grameen Bank and ten large non-government organisations (NGOs) collectively disbursed
Tk17,232 crore in February 2026, a marginal 0.08 per cent increase year on year. They recovered Tk16,046 crore during the month, up 5.45 per cent compared to the same period in 2025.
The outstanding microcredit portfolio stood at Tk133,457 crore, while overdue loans reached Tk8,425 crore, accounting for 6.31 per cent of the total outstanding balance at the end of February 2026.
During July–February of FY26, the share of agricultural credit disbursement in crops rose to 49 per cent from around 48 per cent in the same period of FY25, while livestock and poultry increased to 26 per cent from 24 per cent, according to Bangladesh Bank data.
In contrast, the share of credit allocated to fisheries declined to 13 per cent from 15 per cent, while other sectors fell to 8 per cent from 9 per cent over the same period.
The share of poverty alleviation-related agricultural credit remained unchanged at around 4 per cent. Agricultural and rural finance activities during July–February of FY26 showed steady expansion in credit disbursement along with improved recovery performance, reflecting continued support to productive sectors of the rural economy, according to Bangladesh Bank data.
The central bank said the composition of agricultural credit has increasingly shifted towards crops as well as livestock and poultry, indicating a stronger focus on core agricultural production.
Recovery performance across scheduled banks, Palli Karma-Sahayak Foundation (PKSF), and major microfinance institutions also improved, suggesting better collection efficiency and stronger institutional resilience.
However, Bangladesh Bank cautioned that the rise in overdue agricultural loans remains a key concern for asset quality.
The increase is partly attributed to revised loan classification standards, climate-induced crop damage, and rising living costs.
The central bank said the trend underscores the need to strengthen credit supervision, improve risk mitigation mechanisms, and ensure targeted support for vulnerable borrowers to sustain financial stability.
