Agri credit overdues surge 124% amid asset quality concerns

Overdue agricultural credit across all scheduled banks reached Tk 22,915 crore in February this year, marking a sharp 123.90 percent increase from Tk 10,234 crore in the same month of 2025.

This significant rise -- partly driven by revised loan classification criteria and climate-induced crop damage -- was mainly led by higher overdue loans in state-owned specialised banks, state-owned commercial banks, and private commercial banks.

Despite the surge in overdue loans, the banking sector continued to record steady growth in agricultural credit disbursement. In February 2026, all scheduled banks disbursed Tk 3,120 crore in agricultural credit, up 7.21 percent from Tk 2,910 crore in February 2025.

Cumulatively, during the July-February period of FY26, total agricultural credit disbursement stood at Tk 27,479 crore, reflecting a 24.20 percent increase compared to the corresponding period of the previous fiscal year.

Despite the surge in overdue loans, the banking sector continued to record steady growth in agricultural credit disbursement

The data also indicates a gradual shift in credit allocation towards core production activities.

The share of loans for crop production increased to 49 percent from 48 percent, while livestock and poultry rose to 26 percent from 24 percent. In contrast, the shares of fisheries and other sectors declined to 13 percent and 8 percent, respectively.

Agricultural credit recovery also showed improvement, reaching Tk 2,847 crore in February 2026, a 7.60 percent rise year-on-year. For the July-February period, total recovery by all scheduled banks increased by 13.69 percent to Tk 27,767 crore.

By the end of February 2026, the total outstanding agricultural credit (including interest) stood at Tk 63,723 crore, up 11.66 percent from Tk 57,066 crore a year earlier.

In the microcredit sector, Grameen Bank and 10 large NGOs collectively disbursed Tk 17,231 crore in February 2026. While recovery remained strong at Tk 16,045 crore, up 5.45 percent year-on-year, overdue balances in the microfinance sector rose significantly to Tk 8,425 crore.

This increase was attributed to irregular borrower repayment behaviour, crop losses from natural disasters, and rising living costs.

The Bangladesh Bank report notes that although credit disbursement and recovery trends remain broadly positive across banks and MFIs, the sharp rise in overdue loans raises concerns over asset quality.

The central bank stressed the need for enhanced oversight, stronger risk management, and targeted support for vulnerable borrowers to safeguard financial stability and ensure inclusive rural growth.