Bangladesh Bank has formed a new refinancing fund of Tk10,000 crore with the aim of ensuring the country's food security, increasing agricultural production and creating employment in the rural economy.
Under this five-year fund formed with the central bank's own funds, farmers and rural entrepreneurs will get low-interest loans.
The Agricultural Loan Department of Bangladesh Bank issued a circular in this regard on Monday and sent it to the chief executives of all scheduled banks in the country.
According to the circular, loans will be given on priority to genuine farmers, small and marginal farmers, sharecroppers and women farmers.
Information from the local Department of Agriculture, Fisheries and Livestock or the government's farmer card will be used to verify the identity and eligibility of the farmers.
Under the new scheme, small and marginal farmers can take loans of up to Tk5 lakh without any kind of immovable collateral against the crop and crop liability.
In the case of women and marginal farmers, an opportunity has been provided to take personal or group-based social collateral instead of immovable property.
However, a person who is in default in any bank or financial institution will not get loan facilities under this scheme.
In addition, this loan amount cannot be used for repayment or consolidation of old loans. A customer can avail the benefits of this fund a maximum of three times.
Under the scheme, loans will be disbursed in various sectors of the agricultural and rural economy.
Of these, a maximum of Tk1 crore in the fisheries and livestock sector, a maximum of Tk30 lakh in grain and crop production, a maximum of Tk20 lakh for the purchase of agricultural machinery, and a maximum of Tk15 lakh for income-generating activities and other rural loans.
The loan amount can be used for conducting agricultural work on a maximum of five acres of land.
Bangladesh Bank will provide money from this fund to commercial banks at 4% interest.
Banks will be able to disburse loans at a maximum of 8% simple interest at the farmer or customer level. In the case of Sharia-based banks, the profit rate cannot be set higher than 8%.
This fund of Tk10,000 crore will be operated on a revolving basis. That is, the money returned through the collection of loan installments can be distributed again as new loans.
The maximum loan repayment period at the farmer level will be 18 months. A maximum grace period of three months will also be given by sector.
However, the entire responsibility of collecting loans from farmers will remain with the bank.
Whether the farmer repays the loan or not, the money taken from Bangladesh Bank will have to be returned to the banks with interest within the stipulated time.
The circular states that if any bank collects interest more than the prescribed 8% or misuses the fund, Bangladesh Bank will impose an additional 2% penalty.
In addition, if the central bank does not return the money within the stipulated time, the money will be adjusted from the current account of the concerned bank in Bangladesh Bank.