# Bangladesh Bank Introduces Updated Guidelines for Agricultural Development Fund

*Bangladesh Bank has issued new operational guidelines for the Bangladesh Bank Agricultural Development Common Fund (BBADCF) to ensure banks meet annual agricultural and rural credit targets.*

July 4, 2026 · business

## At a glance

- New guidelines issued for the Bangladesh Bank Agricultural Development Common Fund (BBADCF).
- Banks failing to meet credit targets will have unachieved portions deducted and deposited into the fund.
- Fund provided at 4% interest for a maximum of 18 months; banks can lend at up to 10% interest.
- Loans must be disbursed through bank branches; MFI linkages prohibited.
- Banks must create a Risk Mitigation Fund and maintain a General Reserve.

Bangladesh Bank (BB) has issued new operational guidelines for the Bangladesh Bank Agricultural Development Common Fund (BBADCF) to ensure that scheduled banks fully achieve their annual agricultural and rural credit disbursement targets. According to a circular issued by the Agricultural Credit Department (ACD), banks failing to meet their targets by June 30 of a financial year will have the unachieved portion deducted and deposited into the BBADCF within three months after the end of the financial year. Additionally, any agricultural and rural loans identified as unacceptable following quality verification will be similarly deducted and transferred to the fund.

## Fund Allocation and Interest Rates

Under the new guidelines, Bangladesh Bank will allocate money from the BBADCF to eligible banks within 30 working days based on their requirements and annual agricultural credit targets. The fund will be provided at an interest rate of 4 percent for a maximum tenure of 18 months. In the absence of sufficient applications, the central bank will allocate the fund on a case-by-case basis.

## Loan Disbursement and Risk Management

Banks receiving funds from the BBADCF will lend them to customers at a maximum interest rate of 10 percent. The loans must be disbursed only through the banks' own branch networks, and lending through microfinance institution (MFI) linkages has been prohibited. The maximum loan ceiling for an individual borrower under the scheme has been fixed at Taka 50 lakh. To strengthen risk management, participating banks must create a Risk Mitigation Fund by depositing an amount equivalent to one percent of the interest earned. They are also required to maintain one percent of the interest as a General Reserve under their Common Equity Tier-1 (CET-1) capital.

## Monitoring and Compliance

Banks must submit quarterly progress reports to Bangladesh Bank's Agricultural Credit Department-1, which will monitor implementation through both on-site and off-site inspections. The circular clarified that all credit risks associated with customer loans will remain with the lending banks, and they must repay Bangladesh Bank regardless of their loan recovery performance. The guidelines allow contributing banks to count the amount deposited in the BBADCF as part of their Statutory Liquidity Ratio (SLR).

## Penalties and Recovery

If a bank fails to repay the principal and interest to Bangladesh Bank within the stipulated 18-month period, the central bank will recover the outstanding amount by debiting the bank's current account. The circular warned that any misuse of the fund would result in immediate recovery of the amount along with interest charged at the prevailing policy rate. Issued under Section 45 of the Bank Company Act, 1991, the new guidelines supersede the previous instructions issued on December 19, 2022, and came into effect immediately.

## Sources

- BSS

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Source: https://pulsetoday.com.bd/en/business/bangladesh-bank-issues-new-guidelines-agricultural-development-fund