BB plans agro dev fund to utilise undisbursed loans

The central bank will form a Bangladesh Bank Agricultural Development Common Fund (BBADCF) using the undisbursed portion of agriculture and rural loans to invest in increasing agro production.

Banks, which could not reach their target of disbursing agriculture and rural loans, have to deposit money equivalent to the undisbursed amount of loans in the BBADCF, according to a central bank circular issued Monday.

The Bangladesh Bank would give 2 per cent interest on the deposits, it added.

The BBADCF funds would be allocated among banks in proportion to their capacity, while banks have to repay the loans to the central bank within 18 months with 2 per cent interest.

With the allocated funds, banks can give loans to farmers using their network (except microfinance institution linkage) with an 8 per cent interest, the circular read.