Farmers to Get Loan at 4pc Interest Aiming Food Production Increase

Bangladesh Bank (BB) has announced an agricultural loan disbursement policy to retain a 4 percent concessional interest rate in support of farmers to raise crop production to resolve the crisis triggered by the outbreak of novel coronavirus.

The central bank said in a circular on Thursday that it is necessary to provide low-interest-rate agricultural loans at the farmer's level to increase crop output and to keep the country in food solvent.

A letter was sent to the Managing Directors (MDs) and Chief Executive Officers (CEOs) of the scheduled banks providing guidance on the disbursement of agricultural loans at a 4 percent concessional interest rate at the farmer level.

Earlier, the agricultural loan was allocated at a 4 percent interest rate only for the purchase of substitute crops such as peas, oilseeds, spices, and maize.

At present, the farmer will receive a 4 percent interest rate loan to grow all crops, including paddy and wheat.

As announced by BB's Agricultural Loan Department, a 4 percent concessional interest loan can be used to grow cash crops, vegetables, and tubers.

Bangladesh Bank will award a 5 percent credit as an interest expense to the scheduled banks against the disbursement value of agricultural loans.

BB gave titled of the loan scheme “4 percent concessional interest rate on crops and crops related product to address the crisis caused by the outbreak of novel coronavirus.”

The term of the scheme will be count from April 1, 2020, to June 30, 2021.

In this plan, the interest rate at the farmer's point will be no more than 4%. This interest rate will be beneficial for both current and fresh lending.

The standard interest rate will, however, apply to the remaining period of the existing loans after 30 June 2021.