Agricultural Credit Disbursement and Recovery

The rate of growth of agricultural credit disbursement and recovery of credit has been experiencing lower trend as well as negative rate of growth after September, 2013. The disbursement of agricultural credit stood at Tk. 1086.56 crore in October, 2013, whereas it was Tk. 1149.04 crore in September, 2013. In August, 2013, the disbursement of agricultural credit also decreased by Tk. 399.08 crore. The rate of growth of the disbursement of the agricultural credit stood negative 5.4 percent in October 2013,
where as it was positive 143.2 percent in the September 2013. Recovery of the agricultural credit disbursement has also been increasing at an insignificant amount. If the trend remains as usual, the
disbursement, recovery and rate of growth of the agricultural credit disbursement might decline to Tk. 1007.36 crore, Tk. 1180.32 crore and 7.3 percent respectively in November, 2013. Although the total loan given by state owned commercial banks, foreign banks, and non-bank financial institution, except
the specialized banks sector, increased to Tk. 473242.7 crore at the end of September, 2013 from Tk. 466162.3 crore at the end of June 2013, SME loan as a percentage of total loans has been increasing at an insignificant amount. Even though the total SME loan decreased by Tk. 9451.91 crore at the end of
September 2013 from Tk. 24398.34 crore at the end of September 2012, the rate of growth of SME loan was negative at 5.25 percent in March, 2013. Especially, state owned banks observed a negative growth of 38.47 percent at the end of September 2013 compared to September 2012. According to
the historical track record, total loans and SME loans might increase to Tk. 480342.4 crore and Tk. 110319 crore in December 2013, from Tk. 473242.7crore and Tk. 108599.5 crore in November2013, respectively. Lower disbursement of credit as well as lower recovery in agricultural, industrial, and SME sector not only impact in the present time and increase the default loan but also might impact on the medium term in the economy results in contracts the economy. Borrowing of government from the banking system has been on the increase since July-September. As the borrowing increases every year, its expenditure is also going up due to higher interest payment. However, in the first quarter of 2013,
government borrowed Tk. 465409.7 crore from the banking system, which is Tk. 38225.3 crore lower than the last quarter of the previous year when this amount was Tk. 427184.4 crore. In September 2013, borrowing from the banking system decreased to Tk. 152731.0 crore from Tk. 153868.9 crore in
August, 2013. This borrowing results in recapitalisation by government in the SCBs.