After years on the margins, agricultural lending—widely regarded as the backbone of the economy—has surged back to the centre of national policy debate, propelled by a fast-heating election campaign and growing anxiety over food security.
In a decisive move, Bangladesh Bank (BB) has asked banks to submit detailed information on agricultural loans of up to Tk10,000, ensuring the data is ready for the next government.
The central bank’s move to seek the information came just days after Bangladesh Nationalist Party Chairman Tarique Rahman pledged on January 29 to waive agricultural loans of up to Tk10,000, including accrued interest, and to introduce farmer cards if his party comes to power.
A top BB official said that a director had placed the issue before the board.Explaining the rationale, he said the central bank aims to ensure it can promptly provide relevant data should the next government undertake any policy initiative on agricultural loans or the wider farm sector.
“New refinancing windows and risk-sharing mechanisms are under consideration to encourage greater participation by private lenders”, he told the Daily Observer.
Yet private banks remain cautious. Executives cite weak collateral, weather-related risks, high monitoring costs, and the potential for loan defaults as significant deterrents. They stress that political promises must be backed by regulatory support, crop insurance, and strengthened rural financial infrastructure to ensure sustainable expansion.
Despite these challenges, Bangladesh Bank insists momentum must continue beyond the election. “Agriculture cannot remain a residual sector for finance,” a senior official said. “Food security, inflation control, and rural stability all hinge on timely and adequate credit.”
Data underscores both progress and disparity. Scheduled banks disbursed Tk210.08 billion in agricultural loans in the first half of FY2025–26, marking a 29.2 per cent year-on-year increase. Outstanding farm credit rose to Tk627.23 billion.
Yet the aggregate figures conceal a stark divide: in FY2024–25, banks disbursed Tk37,326 crore—only marginally higher than the previous year and below regulatory targets.
State-owned banks accounted for most lending, often surpassing quotas, while many private commercial banks (PCBs) and foreign banks fell far short, some meeting less than a third of their targets.
Economists suggest election-driven pressure may finally shift the balance. Bangladesh Bank now has a unique opportunity to push reforms that make agricultural lending commercially viable, rather than merely a compliance exercise.
As the campaign intensifies, agricultural loans have emerged as a rare nexus where politics, economics, and livelihoods converge. The central bank’s assertive stance, combined with bold election pledges, could reshape the future of farm credit—and the country’s food security—if followed through.
