The reduced rate would be applicable for both existing and newly disbursed loans
Bangladesh Bank on Monday slashed the interest for agricultural loans to 4%. The new rate will be in place until June 30, next year.
The reduced rate would be applicable for both existing and newly disbursed loans, according to a BB circular issued on the day.
The low interest credit will be disbursed to the crop and grain sector, as per BB circular.
The tenure of the scheme would be effective from April 1 this year to June 30, 2021.
Typically, banks are supposed to disburse farm loans at the highest 9% interest to the farmers. As per the new circular, the central bank would pay 5% of the 9% interest and the farmers would have to bear the rest 4%.
However, the usual interest rate would be applicable on the loans after June 30, 2021.
Bangladesh Bank fixed farm loan target for the current fiscal year at Tk24,124 crore.
In July-February of FY20, banks disbursed Tk15,092.17 crore in loans to the farmers, as per central bank data.
BB also launched another Tk5,000 crore fund for the farmers, setting the applicable interest on 4%.