In recent years, agricultural and rural finance programs have been boosted as the private commercial banks (PCBs) along with state-owned commercial banks (SCBs), have come forward to disburse agri-loans in the country.

In line with the broad-based objectives of the government, Bangladesh Bank (BB) formulates the 'Agricultural And Rural Credit Policy and Programme' to ensure an adequate flow of funds to the agricultural and rural economies in a proper, timely, easier, and hassle-free manner, reaching farmers at the grassroots level. This policy plays a helpful role in increasing the scope of agri-loans, promoting financial inclusion, fostering the use of technology, and expanding banking activities in rural areas.

This article will explore the new and existing products Bangladeshi banks offer as agri loans to farmers of different levels.

Smart Agri Loan by AB Bank

Iftekhar Enam Awal, Head of Business, Corporate, and SME at AB Bank, elaborated on the bank's initiative to provide agricultural loans to marginal farmers through the AB Smart Card. This innovative loan product, operational in 43 Upazilas across 11 districts, benefited 27,008 marginal farmers in 2023, particularly those who are landless or sharecroppers. Additionally, the bank's 19 programs, totaling loans worth 154.01 crore, directly contributed to agricultural production, yielding 24,000 metric tons of grains across 12,500 acres of land.

The farmers are required to submit the Agricultural Input Assistance Card issued by the Department of Agriculture Extension along with their own NID Card to obtain an agricultural loan from AB Bank. Additionally, a personal guarantee from their spouse and a guarantee from a third party are required. Once the loan is approved, disbursement is made to the customer's account, from which they can withdraw funds as needed through the AB Smart card. After full repayment of the loan, farmers can apply for further loans for different agricultural activities, and the loan amount may be increased if necessary.

Demand and Term Loans by Bank Asia

"The existing demand and term agri loan products cover all needs of farmers in terms of their convenience, purposefulness, and ease of repayment. The existing products are also being offered at a low price with a moratorium depending on the requirement of the farmer. Farmers can get season-based loans easily either in one-time mode or in installments," said Md. Shaminoor Rahman, Senior Executive Vice President & Head of SMR, Bank Asia.

The Demand and Term Loan products include:

Dairy Support: for milk production and beef fattening

Fishery Support: for all types of fish cultivation and hatchery

Poultry Support: for poultry projects involved in egg and meat production

Loan against Tk10 A/C: for small/marginal/landless farmers, micro/marginal/small business people involved in any income-generating activity, people affected by natural calamities involved in any income-generating activities, disabled & women entrepreneurs

MFI Finance: for financing ultimate beneficiaries through MFIs

Additionally, the Demand Loan product, Cropping Support, is for cultivating all types of crops, vegetables, medicinal plants, fruits, and flowers. (Note that for the cultivation of pulses, oilseeds, spices, and maize, the loan is provided only at 4.00% per annum). The Term Loan, Agricultural Equipment Support, is for purchasing agri-machinery and irrigation equipment.

PHOTO: STAR

Capital and Term Loans by BRAC Bank

"We have developed our digital process to reduce the processing time of loans to marginal farmers. Hence, they can avail of loans up to BDT 50,000 using smartphones in the quickest possible time," said Syed Abdul Momen, Deputy Managing Director & Head of SME Banking, BRAC Bank.

BRAC Bank has working capital loans and term loans for the farmers' specific needs. They can also avail of term loans for fixed assets and agri-machinery procurement. All agri loan products can be availed at a lower rate than regular ones, with easy terms and conditions and charges, no supervision and processing costs.

Krishi Loan by City Bank

"City Bank currently offers only the 'Krishi Loan' to farmers, with quick disbursement within 3-5 days. In 2022-23, the bank surpassed Bangladesh Bank's target of BDT 574 crore, disbursing BDT 966 crore, which is 168% of the goal. 70% of the disbursement was through NGOs, and 30% via its own channels, positioning it as one of the top banks in providing agri loans," said Kamrul Mehedi, Head of SME at City Bank.

This year, City Bank aims to launch the 'Digital Agri Loan' to efficiently reach more farmers, leveraging technology to bridge the digital gap. The loan will utilize a scoring engine based on factors such as behavior, social data, transaction patterns, and crop cycles to accurately determine loan amounts and purposes. City Bank is providing loans to farmers through agent banking in a hybrid model and this transactional data will be pulled out to prepare the scoring engine for digital lending to the farmers.

Sufola (Ezy Bank Account) by Dhaka Bank

The Sufola Ezy Bank account is a relatively new loan product offered by Dhaka Bank. "Farmers can easily open a Sufola bank account using a smartphone or tablet, eliminating the need to visit a branch. With this account, they can access agricultural credit and receive a complimentary debit card. The debit card allows them to transfer funds from their loan account to the Sufola account for purchasing daily necessities or agricultural inputs. Additionally, they can transfer funds from the Sufola account to mobile banking apps. In addition to the Sufola account, Dhaka Bank offers nano loans ranging from Tk.5,000.00 to Tk.50,000.00, ideal for farmers facing short-term financial crises. To avail of this service, only a mobile number, NID, and reference are required. If any farmer applies properly, within 3 hours disbursement could be completed." said Md. Katebur Rahman, Senior Vice President, and Head of the Agriculture Banking Unit at Dhaka Bank.

In recent years, agricultural and rural finance programs have been boosted as the private commercial banks (PCBs) along with state-owned commercial banks (SCBs), have come forward to disburse agri-loans in the country.

Dhaka Bank also offers various existing agricultural credit products, including Overdraft Agriculture (OD Agri), Short Term Loan Agriculture (STLA), Term Loan Agriculture (TLA), Bai Muazzal Agriculture, Murabaha Purchase Order Agriculture, and Murabaha Term Finance Agriculture. Utilizing these products, Dhaka Bank provides agriculture loans/investments for individuals against secured assets (mortgaged property). Conversely, the new products offer insured loans to farmers. Considering the needs of small farmers, Dhaka Bank provides a group credit facility where no security is required, enabling small/marginal farmers to access credit facilities within a very short time.

EBL Krishi Rin by Eastern Bank

EBL has provided financing of up to 1.5 lac to farmers for cultivating crops such as paddy, wheat, and vegetables through its existing agri-product called 'EBL Krishi Rin.' The bank offers this loan for a period of 6 to 12 months under the Agri general loan or food safety scheme of Bangladesh Bank.

"We have already achieved the target under the food safety scheme of Bangladesh Bank, as well as agri general loans, and disbursed BDT 550 crore worth of loans with NGO linkage in FY24," shared M. Khorshed Anowar, Head of Retail & SME Banking.

Krishi DL by Mutual Trust Bank (MTB)

MTB Bank's 'Krishi DL' is a new product tailored to synchronize cash flow with specific timeframes, launched in 2022. It aims to streamline customer transactions while disbursing loans to farmers 15 to 30 days before their seasonal needs arise. The loan offers tenor options of 1, 3, 4, 6, and 12 months, determined by the farmer's loan amount and the intended crop.

This approach aligns loan disbursement with the farmer's seasonal demands, facilitating timely repayment once harvesting generates sufficient cash flow. For instance, MTB extends a 6-month repayment period for long-term endeavors such as raising cattle, whereas activities like milking necessitates installment payments.

"Additionally, MTB offers an existing agricultural loan product called 'MTB Krishi', structured as an installment plan. The key distinction between the two lies in the flexibility afforded to customers: whether they prefer monthly/quarterly repayments or settling the entire loan once adequate cash flow is available, depending on their practical circumstances," said Kazi Mohammad Selim, Head of Cluster 4 for SME and Agri Banking Division at MTB.

MDB Krishi Loan by Midland Bank

Midland Bank currently offers the primary loan product, 'MDB Krishi Loan,' which is versatile and tailored to various agricultural needs, including direct disbursement to farmers or through NGO partnerships. Loan allocation is based on crop types and duration, aligning with the unique timeframes of each crop. Additionally, in collaboration with NGOs, Midland Bank strives to reach areas lacking branch presence, ensuring widespread farmer access. NGOs report disbursement details to Midland, which are subsequently forwarded to Bangladesh Bank for regulatory scrutiny.

"In progress and currently undergoing vetting and evaluation for imminent introduction is the 'Buy Back Agreement' product aimed at financing large-scale agricultural machinery purchases," said Md. Ahsan Jamil Hossain, Vice President and Head of Agri Loan, Midland Bank.

Another ongoing initiative is contract farming, where agro-based industries such as Pran, Square, and others request loans for farmers, with the harvested crop serving as loan collateral while documentation ensures industry accountability.

Abad, Krishok, Nabanno, and Khamar by Prime Bank 

"Prime Bank tailors its agriculture and rural credit program, focusing on crops, livestock, and fisheries. It offers collateral-free products, implements digital loan origination systems, and collaborates with agent outlets to serve farmers in remote regions. Defining Agriculture as crop & non-crop by nature, Prime Bank has introduced two products styled Abad and Krishok for crop loans. In contrast, Khamar and Nabanno are running successfully as non-crop loans," mentioned Nazeem A. Choudhury, Deputy Managing Director – Consumer Banking at Prime Bank.

Private commercial banks in Bangladesh are taking proactive measures to improve the country's socio-economic condition and bolster the agricultural and rural sectors by offering a range of agri-loans to farmers. It is encouraging to witness these banks continuously introducing new products each year, aiming to maximize support for farmers, even though it may take time to realize their full potential.