Krishi Bank Trails Far Behind CMSME Lending Target

Bangladesh Krishi Bank (BKB) has come under heightened regulatory and policy scrutiny after falling markedly short of its lending targets for the Cottage, Micro, Small and Medium Enterprise (CMSME) sector, a cornerstone of the country’s employment generation and inclusive growth strategy. The bank’s sluggish performance in the current financial year has raised concerns not only about its institutional capacity and strategic planning, but also about its ability to access key central bank incentives and low-cost refinancing facilities.

According to an internal report of the state-owned lender, BKB set itself an ambitious CMSME lending target of Tk 12,500 crore for the ongoing fiscal year. However, as of 27 November, actual disbursements stood at just Tk 2,363 crore—equivalent to a mere 18.91 per cent of the annual goal. With a substantial portion of the financial year already elapsed, such limited progress has prompted fresh questions about the bank’s operational effectiveness, field-level execution and alignment with national economic priorities.

The shortfall appears even more serious 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. Bangladesh Krishi Bank, however, remains well below this benchmark. As of the end of November, its total outstanding loans amounted to Tk 35,337 crore, of which CMSME lending accounted for Tk 6,641 crore—approximately 19 per cent of the portfolio.

A senior BKB official, speaking on condition of anonymity, attributed the weak performance to a combination of economic and administrative challenges. Persistently high inflation has eroded consumers’ purchasing power, dampening demand for goods produced by cottage and small enterprises. As a result, many entrepreneurs are reluctant to seek new credit. “When market demand is weak, business owners naturally become cautious about taking on additional financial risk,” the official explained.

Compounding the problem, stricter scrutiny has been introduced into the loan approval process following recent changes in government. While these measures aim to strengthen governance and reduce credit risk, they have extended approval timelines by two to three weeks, slowing overall disbursement momentum.

The situation is further complicated by Bangladesh Bank’s Tk 25,000 crore refinancing scheme, launched in 2022 and extended again on 12 November this year. Under the scheme, banks can borrow from the central bank at 2 per cent interest and on-lend to entrepreneurs at rates of up to 7 per cent. Yet BKB’s failure to meet CMSME targets has limited its ability to fully utilise this concessional facility.

Earlier this month, Managing Director Sanchia Binte Ali expressed dissatisfaction with the bank’s CMSME lending performance at an internal meeting, urging officials at all levels to intensify their efforts. She warned that continued underperformance could jeopardise both the bank’s development mandate and its access to policy incentives.

As the government and regulators place the CMSME sector at the heart of Bangladesh’s economic strategy, Bangladesh Krishi Bank now faces the pressing challenge of swiftly restructuring and revitalising its lending operations. Policymakers and market analysts alike will be watching closely in the coming months to assess whether the bank can realign itself with national priorities and regain momentum in this critical sector.