Loan repayments by farmers have gone up significantly in the first seven months of this fiscal year as the farm sector that already has a sound credit history emerged almost unscathed from the devastating fallouts of the pandemic.

Between July and January this fiscal year, loan repayments by farmers stood at Tk 16,056 crore, up 19 per cent year-on-year, according to data from the central bank.

"Farmers have been good borrowers historically and the recovery rate from the farm sector is higher than many other sectors," said Md Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank (BKB).

The recovery figure of farm loans has given an indication that the agriculture sector has not been hit hard by the pandemic, rather the rural economy has done well, he said.

"We did not even compel farmers to repay their loans given the pandemic situation. Despite that, they showed a good performance in terms of paying back their fund on time."

BKB, which is dedicated to give out farm loans, is highly satisfied with the performance of farmers, Prodhania said.

In the first seven months, the lender recovered Tk 4,264 crore, which is the highest among other banks.

For instance, the country's banking sector recovered Tk 36,711 crore last year from all sections of the economy.

This means a large portion of recovering funds came from farm loans during the period.

As of January this year, default loans in the farm sector stood at Tk 4,446 crore, which is 10.03 per cent of the total outstanding agri loans.

However, the ratio of nonperforming loans in the farm sector is higher than the overall default loans in the banking sector.

The ratio of default loans stood at 7.66 per cent of the outstanding loans of Tk 1,158,775 crore as of December, according to Bangladesh Bank data.

But the ratio is not a genuine one as banks frequently reschedule and write off the default loans of large borrowers.

But, the example is rare for the farm sector, a Bangladesh Bank official said.

Prodhania echoed the same, saying that the ratio of loan rescheduling in farm loans is insignificant considering the trend of large borrowers, he said.

Banks now give out farm loans in a speedy manner now as they are paying off from the loan programme, he said.

In addition, farmers now get funds from the central bank's stimulus packages, which is helping the sector produce agriculture products efficiently.

Banks disbursed Tk 14,148 crore in the first seven months, which is 53.81 per cent of the total annual target set by the banking watchdog.

The rural economy would do better in the days ahead due to the ongoing loan injection into the farm sector, said Syed Mahbubur Rahman, managing director of Mutual Trust Bank.

Many farmers repaid their money on time in order to manage funds from the stimulus package initiated by the central bank, he said.

As of December 29 last year, banks distributed Tk 3,411 crore, or 68 per cent of the refinance scheme worth Tk 5,000 crore.

Farmers repaid their money on time, putting a positive impact on the entire banking sector, said MA Halim Chowdhury, managing director of Pubali Bank.

The pandemic moments have proved it once again, Chowdhury added.