Bangladesh Bank raises agricultural loan target to BDT 600bn for FY27
Bangladesh’s central bank has increased its agricultural lending target by nearly 54 percent to BDT 600bn for the upcoming fiscal year, a move that will require private and state-owned lenders to significantly expand rural credit access while absorbing new regulatory constraints.
Bangladesh Bank has set a BDT 600bn ($4.91bn) target for agricultural and rural loan disbursements in fiscal year 2026-27. This represents an increase of nearly 54 percent from the previous year’s target, signaling a major push to deepen financial inclusion in the country’s rural economy.
The revised Agricultural and Rural Credit Policy allocates BDT 395.05bn of this target to private and foreign banks. State-owned and specialised commercial banks are assigned the remaining BDT 204.95bn.
Deputy Governor Habibur Rahman acknowledged that the elevated target would place pressure on financial institutions. However, he maintained that the goal remains achievable for the banking sector.
Agricultural lending currently accounts for roughly 2.5 percent of total bank credit in Bangladesh. The central bank expects the new policy to lift this share to approximately 4 percent of overall lending during FY27.
To facilitate this expansion, the central bank is removing several barriers to entry for smaller borrowers. Banks are now prohibited from requiring collateral for loans up to BDT 500,000.
Furthermore, financial institutions cannot impose service charges, excluding documentation fees, on loans up to BDT 500,000 for fisheries, livestock, and salt cultivation on plots up to 1.01 hectares. Women and marginalized farmers may now use social or group guarantees instead of traditional land-based collateral.
The policy also broadens the definition of eligible agricultural activities. Credit will now cover the cultivation of crops such as blueberries, Yam, Ashwagandha, and Roselle, alongside organic fertiliser production using eggshells.
Fish and poultry hatcheries, as well as camel rearing, have also been added to the approved lending programme. This diversification aims to capture emerging niches within the broader agricultural economy.
Ensuring these funds reach legitimate operators remains a priority. Banks must verify borrowers using certificates from local agriculture, fisheries, or livestock officials, or through the government-issued Farmer Card.
Additionally, lenders must channel at least half of their agricultural lending target through their own branch and distribution networks. The remainder can be disbursed via third-party linkage networks.
The central bank is building on recent momentum in rural finance. In FY2025-26, banks disbursed BDT 428bn in agricultural loans, exceeding the BDT 395bn target by 9.83 percent and reaching 3.78 million beneficiaries.
