Bangladesh Bank (BB) has introduced a Taka 3,000 crore refinancing scheme to accelerate agricultural production, agro-processing, preservation infrastructure and export-oriented activities in the Rajshahi and Rangpur divisions. The fund aims to transform the country's northern region into a competitive agro-based economic hub by addressing supply chain bottlenecks, reducing post-harvest losses and expanding value-added agricultural industries. The refinancing facility will remain effective for three years from the date of the circular.
Scheme Details and Objectives
According to the circular, scheduled banks will receive refinance from Bangladesh Bank at an interest rate of 4 percent and will not be allowed to charge borrowers more than 9 percent. The ceiling applies to both conventional and Shariah-based financing. The initiative seeks to increase production in the crop, fisheries and livestock sectors, strengthen preservation and marketing facilities, promote agro-based industries and CMSMEs, boost exports of agricultural products and generate employment in the northern region.
Fund Allocation and Loan Provisions
Of the total fund, 15 percent has been allocated for agricultural production, including crop cultivation, fisheries, livestock and irrigation equipment. Another 35 percent will finance preservation and infrastructure projects, including cold storage, warehouses, silos and cold-chain logistics, while working capital will also be eligible under this category. A further 35 percent has been earmarked for agro-processing industries, including automatic rice mills, bio-fertiliser plants and biotechnology-based vaccine and medicine manufacturing. The remaining 15 percent will support export-oriented processing and supply of agricultural products.
Under the scheme, individual farmers or groups will be eligible for loans of up to Taka 30 lakh for production activities. Loans of up to Taka 40 crore will be available for preservation infrastructure and agro-processing industries while export-oriented projects will be eligible for financing of up to Taka 15 crore. Banks may increase these limits by up to 20 percent based on justified demand.
Repayment Terms and Collateral Arrangements
The repayment period has been fixed at a maximum of 18 months, including a three-month grace period, for production loans. Loans for preservation, processing and export sectors will have a tenure of up to 36 months, including a grace period of three to six months. To encourage financial inclusion, Bangladesh Bank has instructed banks to consider alternative collateral arrangements, including personal, social and group guarantees, for women entrepreneurs and marginal farmers who lack conventional security.
Implementation and Compliance
The central bank also directed that the refinancing facility be used only for fresh loan disbursements and not for adjustment, rescheduling or settlement of existing loans. Banks must sign a participation agreement with the Agricultural Credit Department-2 (ACD-2), which will administer the scheme. Refinance claims must be submitted by the 15th of the following month, while delayed claims beyond two months without valid justification will not be accepted. Bangladesh Bank warned that any bank charging borrowers above the prescribed interest ceiling or misusing the refinancing facility would be subject to an additional 2 percent penal interest on the misused amount.
Significance and Future Outlook
The introduction of this refinancing scheme is a significant step towards enhancing the agro-based economy in the northern region of Bangladesh. By providing affordable financing and addressing key bottlenecks, the scheme aims to boost agricultural productivity, reduce post-harvest losses, and promote value-added industries. This initiative is expected to create employment opportunities, increase exports, and contribute to the overall economic development of the region.
