Insurers Lack Capacity for Farm Sector Coverage: BB Governor

Bangladesh Bank Governor Ahsan H Mansur has said the country’s insurance companies are not yet capable of operating agricultural insurance, citing a lack of skills, financial strength, and risk management capacity.

Speaking while unveiling the central bank’s new agricultural and rural credit policies for FY2025–26, he said agricultural insurance is risky and unlikely to be feasible within the next decade.

“I want it to happen, but the reality is our insurers do not have the capacity to manage agricultural risk or pay required claims. Without these abilities, it’s not viable,” Mansur said, adding that the sector has discussed farm insurance for years without tangible progress.

The governor also linked July’s inflation uptick to rising rice prices, noting that most other product prices had either stabilised or fallen. “If rice were excluded from the index, inflation would have dropped by 1%,” he said, suggesting imports could be used to stabilise prices.

Mansur stressed that agricultural loans must reach farmers directly and not be diverted to intermediaries. For FY2025–26, the agricultural and rural credit target has been set at Tk 390 billion, up 2.63% from last year. Of this, Tk 138.8 billion will be disbursed by state-owned and specialised banks, and Tk 251.2 billion by private and foreign banks.

The updated policy allocates 20% of loans to the livestock sector, 2% to irrigation and farm machinery, waives the CIB service charge for loans up to Tk 250,000, and expands financing to new crops such as beetroot, black cumin, ginger, garlic, and turmeric. Loans will also be distributed based on regional production potential.

The central bank expects the policy to boost food security, control inflation, create jobs, and strengthen the rural economy.