Bangladesh Bank (BB) has revamped its Tk 10,000 crore refinancing scheme aimed at invigorating agricultural production, ensuring food security, and generating employment in rural areas. According to a recent circular, participating banks will now receive refinancing from the central bank at an interest rate of 3 percent. At the farmer level, the interest rate is capped at a maximum of 7 percent, calculated at a simple interest rate.
For Shariah-based financing, the profit rate at the customer level must align with Shariah-approved investment policies but cannot exceed 7 percent. The revised interest or profit rate applies uniformly to all customers, with charges based on the declining balance of the loan or investment where applicable. Participating banks are required to repay the principal and interest or profit to Bangladesh Bank within a maximum of 18 months from the date of receiving refinancing.
The central bank has also revised the repayment provision. If Bangladesh Bank determines that the funds provided under the scheme have not been properly utilized, or if a participating bank charges interest or profit exceeding 7 percent against the loans or investments disbursed, the concerned bank will have to pay an additional 2 percent interest on the relevant amount as a one-time charge, in addition to the prescribed rate.
Furthermore, the circular instructs participating banks to promote the scheme among farmers by displaying banners inside and outside bank branches at easily visible locations. These banners should provide information on loan disbursement or investment activities under the refinancing scheme at a 7 percent interest or profit rate at the farmer level. The Bangladesh Bank circular emphasized that other provisions of the earlier circular would remain unchanged and the revised instructions would take effect immediately.
This refinancing scheme is crucial for Bangladesh's agricultural sector, which is a significant contributor to the country's economy and a major source of employment. By providing affordable financing options, the scheme aims to support farmers in enhancing their productivity and ensuring a stable food supply. The revisions reflect the central bank's commitment to making the scheme more effective and accessible to those in need.
