The move is aimed at helping customers deal with rising costs and support them in transitioning towards sustainable practices.
NatWest will deploy the funds through various means such as traditional loans, asset financing, green loans and increased overdrafts.
The latest announcement by NatWest builds on the earlier set of measures that include capital repayment holidays and reductions on small business loans.
According to the bank’s analysis, due to Russia-Ukraine war nitrogen fertilizer now costs around £760 per tonne, which was £280 in May 2021.
The cost of gas is up 200% and electricity is up 40%, which are among the top factors squeezing the agriculture industry’s margin.
NatWest head of agriculture Ian Burrow said: “Inflation, supply chain challenges and the war in Ukraine are combining to cause steep rises in the cost of essential materials for the sector such as fertiliser and feed, on top of the broader challenge of fuel and energy costs that the wider economy faces.
“Together these impacts are putting intense pressure on profit margins, and we know the sector needs access to funding to navigate through the coming months. We are boosting our financial support for farmers by £1.25bn to help them through this challenging period.
“Our agricultural managers have in-depth knowledge of the sector, including being able to offer this individual financial support, where needed. We would urge affected customers to get in touch with their local agriculture relationship manager to discuss how we can help.”