BB announces Farm Credit Policy lowering interest rate

The Bangladesh Bank on Thursday announced the Agricultural and Rural Credit Policy Programme for FY 2021-22 with a target to disbursing Tk 28,391 crore in the agricultural sector.

The target is 7.98 per cent higher than the previous year’s target of Tk 26,292 crore. The interest rate on lending for the sector has been reduced to 8 per cent from 9 per cent.

In the last fiscal year, banks disbursed Tk 25,511crore as agriculture loans, which is 97.03 per cent of Tk 26,292 of last year target.

The BB in its latest policy on farm credit said considering the pandemic situation and in view of the growing demand for agricultural and rural credit, disbursement targets for the state-owned and specialised commercial banks (SCBs) have been fixed at Tk 11,045 crore. For private and foreign commercial banks, the target is Tk 17,346 crore.

To ensure food security and develop a sustainable agricultural credit system, the central bank included some new issues in the current agricultural credit policy.

These are – inclusion of credit norms for rearing Sonali Hen under the poultry subsector, rearing buffalo and Garol Sheep under the livestock subsector, reducing interest rate of agricultural credit from 9 per cent to maximum 8 per cent.

Considering the demand of the farmers and the actual scenario of farming activities in a particular area, per acre credit limit can be increased or decreased to 15 per cent.

In the last fiscal year, the agricultural and rural credits were disbursed among 30,55,166 persons in total, of which 16, 05,947 women borrower have received Tk 9,287.96 crore. Besides, 22, 45,512 small and marginal farmers have received Tk 17,639.93 crore from different banks.

Moreover, Tk 33.96 crore was disbursed among 7,796 farmers of char, haor and less developed areas of the country, the central bank notified.

Bangladesh Bank in May 2020 created a refinance scheme of Tk 5,000 crore from its own fund for working capital-based agricultural sector to face the Covid-19 pandemic fallout. The tenure of the scheme ended in June 2021. Under this scheme, the banks have disbursed Tk 4,295.14 crore.