Families Crushed by Debt: Farmers Paying Interest Rates of 20–25%

Staff Reporter

Although there is a system of low-interest loans for farmers, in reality many are forced to take loans at high interest rates. Bank agricultural loans are not being provided directly to farmers but are being provided through non-governmental organizations (NGOs) that distribute microfinance. This is increasing the interest rate to 20 to 25 percent.

To cope with the pressure of frequent installment payments, some are selling livestock, poultry, and even household rice. Many families are becoming destitute, unable to bear the burden of debt.

The tragic fate of Monirul Islam’s family in Rajshahi’s Paba Upazila highlights the severity of this crisis. He killed his wife and two children on August 15 last year after failing to pay his NGO loan installments.

Before his death, he wrote in a note, “We died of debt and lack of food.”

Monirul’s father said that the pressure of not being able to pay the weekly installments pushed his son to such an end.

Bangladesh Bank’s Agricultural and Rural Credit Scheme offers loans at a maximum interest rate of 7 percent at the customer level. In addition, banks are required to distribute at least 4 percent of their total loans to the agricultural sector.

Still, many banks are distributing loans through NGOs rather than directly to farmers, increasing the cost of loans before the low-interest funds reach the farmers.

In the first two months of the 2026-27 fiscal year—July and August—banks disbursed a total of Tk 6,858 crore in agricultural loans. Of this, government banks disbursed Tk 2,375 crore. Private and foreign banks disbursed Tk 4,483 crore.

According to Bangladesh Bank data, 42.38 percent of the agricultural loans disbursed have defaulted.

Executive Director of the Center for Strategic and Peace Studies, Professor Dr. Md. Mizanur Rahman, said that many banks provide loans through NGOs due to high operational costs in distributing agricultural loans. In this way, even if farmers receive loans, they have to pay higher interest rates.

BRAC Bank Managing Director Tarek Refat Ullah Khan also said that if a loan is taken through an NGO, the interest rate at the farmer level can be 20 to 22 percent.

However, according to Mohammad Kamal Hossain, director of the Microcredit Regulatory Authority, the interest rates on microloans are relatively high due to the high operational costs of extending loans to remote areas.

He said that if funds are available at low interest rates, NGOs will also be able to provide loans to customers at low interest rates.

According to experts, to reduce the cost of borrowing for farmers, the process of obtaining direct loans from banks must be simplified. At the same time, it is important to expand the range of banking services at the marginal level.