Bangladesh Krishi Bank (BKB) is facing mounting scrutiny after falling alarmingly short of its lending targets for the Cottage, Micro, Small and Medium Enterprise (CMSME) sector, a shortfall that now threatens both its institutional credibility and its access to key central bank incentives. The underperformance has raised broader concerns among policymakers, given the CMSME sector’s pivotal role in employment generation, grassroots entrepreneurship and inclusive economic growth across Bangladesh.
According to an internal BKB report, the bank had set an ambitious CMSME loan disbursement target of Tk 12,500 crore for the current financial year. However, as of 27 November, actual disbursement stood at only Tk 2,363 crore—just 18.91 per cent of the annual target. With a substantial portion of the fiscal year already elapsed, such sluggish progress has cast doubt over the bank’s planning capacity, operational efficiency and commitment to national economic priorities.
The shortfall becomes even more significant in light of recent directives from Bangladesh Bank. In a circular issued on 17 March this year, the central bank instructed all scheduled banks to ensure that at least 25 per cent of their total loan portfolios are allocated to the CMSME sector by 2025. Krishi Bank remains well below this threshold. By the end of November, its total outstanding loans amounted to Tk 35,337 crore, of which CMSME loans accounted for Tk 6,641 crore—approximately 19 per cent of the total.
A senior BKB official, speaking on condition of anonymity, attributed the weak performance to a convergence of economic and administrative challenges. Persistently high inflation has eroded consumer purchasing power, dampening demand for goods produced by cottage and small industries. As a result, many entrepreneurs have become reluctant to take on new loans. “When market demand weakens, entrepreneurs naturally become cautious about assuming additional financial risk,” the official explained.
Administrative factors have also contributed to delays. Following the formation of a new government, loan approval procedures have reportedly become more stringent, with enhanced scrutiny aimed at improving governance and reducing credit risk. While well-intentioned, these measures have extended loan processing times by two to three weeks, significantly slowing disbursement momentum.
The situation is further complicated by Bangladesh Bank’s renewed push to expand CMSME credit through its Tk 25,000 crore pre-financing scheme. Originally launched in 2022 and extended again on 12 November after expiring in July, the scheme allows banks to access central bank funds at just 2 per cent interest and lend to entrepreneurs at a maximum rate of 7 per cent. Yet BKB’s failure to meet its targets has limited its ability to fully capitalise on this low-cost facility.
Earlier this month, Managing Director Sanchia Binte Ali expressed frustration over the bank’s CMSME lending performance during an internal meeting. She urged officials at all levels to intensify their efforts and cautioned that continued underachievement could undermine both the bank’s developmental mandate and its eligibility for financial incentives.
As the government and regulators place the CMSME sector at the heart of Bangladesh’s economic strategy, Krishi Bank now faces the urgent challenge of recalibrating its approach. Whether it can realign its lending operations with national priorities in the coming months will be closely watched by policymakers and market observers alike.