Bangladesh Bank has launched a Tk10,000 crore refinance scheme aimed at boosting agricultural production, strengthening food security and generating employment in rural areas as part of efforts to support the country’s rural economy.
In a circular issued on Monday, the central bank said the initiative recognises the critical role of agriculture in ensuring food security, reducing poverty, increasing rural incomes and helping communities cope with the adverse effects of climate change.
The scheme, titled “Refinance Scheme for Agriculture and Rural Sector to Increase Agricultural Production and Ensure Food Security and Employment Generation,” will operate with a revolving fund of Tk10,000 crore financed from Bangladesh Bank’s own resources. The facility will remain in force for five years.
The Agricultural Credit Department-2 at Bangladesh Bank headquarters will administer the scheme. Scheduled banks will be able to participate through agreements with the central bank and receive annual allocations for onward lending to eligible borrowers.
Loans disbursed under the scheme will count toward banks’ annual agricultural credit targets. Participating banks will be required to maintain separate accounts for the fund and conduct all related transactions through those accounts.
Under the programme, small, marginal and sharecropping farmers will be eligible for unsecured loans of up to Tk5 lakh for crop cultivation against crop hypothecation alone.
The facility will apply to cultivation on up to five acres of land. For larger farming operations, collateral requirements will be determined by individual banks in line with their policies.
The maximum loan ceiling has been set at Tk30 lakh for crop production, Tk15 lakh for income-generating rural activities, Tk20 lakh for agricultural machinery, and Tk1 crore for fisheries and livestock projects.
Women and marginal farmers will be allowed to use alternative forms of collateral, including personal, social or group guarantees.
Interest rate and tenure
Under the scheme, banks will receive refinance from Bangladesh Bank at an interest rate of 4%.
The maximum lending rate for borrowers will be capped at 8% on a simple interest basis. For Shariah-based financing, the profit rate will also be limited to 8 percent.
The loan tenure will be up to 18 months, including a grace period of three months.
The central bank said the facility cannot be used to adjust existing loans, and borrowers classified as defaulters will not be eligible. A borrower may avail of the facility a maximum of three times.
Responsibility for loan recovery will rest entirely with participating banks.
Banks will be required to maintain separate records for each loan and submit monthly reports to Bangladesh Bank.
The central bank will conduct regular monitoring and evaluation, including on-site inspections, to ensure proper implementation.
Participating banks have also been instructed to undertake awareness campaigns through their branches to inform farmers about the scheme.
Assistance from the Department of Agricultural Extension, Department of Fisheries and Department of Livestock Services will be used to identify eligible beneficiaries.
According to Bangladesh Bank, the scheme is expected to increase agricultural production, create rural employment, strengthen food security, reduce poverty and enhance the overall dynamism of the rural economy.
Bd-pratidin English/ ANI
