BB unveils FY26 agri credit policy with higher loan target

Bangladesh Bank has announced its Agricultural and Rural Credit Policy and Programme for the fiscal year 2025-26, increasing the farm loan disbursement target to Tk39,000 crore, a 2.63% rise from last year’s target of Tk38,000 crore.

The central bank said the move is aimed at boosting agricultural productivity, ensuring national food security, and strengthening rural livelihoods in the face of rising input costs and growing climate change challenges.

The policy was officially launched on Tuesday at a press conference where Governor Dr Ahsan H Mansur highlighted its key features.

The policy was prepared by the central bank’s Agricultural Credit Department.

At the same event, Bangladesh Bank also introduced a new Web-Based Agri-Credit MIS software, designed to improve loan monitoring and policy formulation for agricultural and rural credit.

The programme launch was attended by deputy governors, the head of the Bangladesh Financial Intelligence Unit (BFIU), the chief economist, senior officials from the Agricultural Credit Department, and chief executives of scheduled banks.

Key new policy measures

The FY2025-26 policy introduces several new initiatives to align agricultural credit practices with Sustainable Development Goals (SDGs), constitutional provisions, and relevant banking laws.

The major policy updates include increased sectoral allocation. The livestock sector’s share of agricultural credit has been raised from 15% to 20%.

These also include support for irrigation and mechanisation. A new 2% allocation has been introduced for irrigation and agricultural equipment.

Another update is CIB charge waivers. The Credit Information Bureau (CIB) service charge will be waived for loans up to Tk2.5 lakh.

CIB reporting will be mandatory for all agricultural loans, regardless of amount.

For livestock and fisheries loans up to Tk3 lakh, only essential documents – demand Promissory (DP) note, personal guarantee, and hypothecation – will be required.

All sub-sectors – crops, livestock, and fisheries – will be covered under the contract farming initiative.

New eligible crops – jackfruit, cucumber, taro stems, beetroot, black cumin, ginger, garlic, turmeric, and date molasses have been added to the list of crops eligible for loans.

Flexibility in credit norms – banks may deviate by up to 20% from preset credit norms based on farmers’ locations and specific demands.

Also, banks are encouraged to share a portion of their profits with agents to speed up lending through agent banking channels.

The policy also instructs banks to use agricultural production potential data from the Crop Zoning System or the Khamari App, developed by the Bangladesh Agricultural Research Council, when applying the area-based lending approach.

Credit targets by bank type

Of the Tk39,000 crore total target, state-owned and specialised banks will disburse Tk13,880 crore and private and foreign commercial banks will disburse Tk25,120 crore.

All scheduled banks are required to submit their annual agricultural credit programmes in line with the central bank’s guidelines.

Banks failing to meet their targets will be required to deposit the shortfall, without interest, into Bangladesh Bank’s Agriculture and Rural Credit Department.

These funds will then be refinanced to other lenders for disbursement.

Operational directives for banks

Bangladesh Bank has directed banks to ensure lending before planting seasons, simplify loan approval processes, and strengthen monitoring to prevent misuse of funds.

Awareness campaigns will be organised for farmers, and borrowers with consistent repayment records will be recognised and rewarded.

Governor Mansur expressed optimism about the policy’s potential, stating that it would “boost crop production, stabilise prices, create employment, and contribute to a sustainable economy.”

The central bank expects that increased agricultural credit will help control inflation, generate rural employment, raise incomes, and ultimately support sustainable development and macroeconomic stability.