Landless wheat, maize farmers to get collateral-free loan

The Bangladesh Bank has created a Tk 1,000 crore refinancing scheme for wheat and maize farmers, as it seeks to reduce import dependence, and ensure food security through more cultivation of staple grains.

Under the scheme, landless marginal farmers and sharecroppers will be provided with up to a maximum of Tk 2 lakh bank loans without collateral to cultivate wheat and maize.

A marginal farmer will get the loan at 4 per cent interest rate and the tenure of the loan will be as specified in the Agricultural and Rural Credit Policy, according a BB circular issued on Thursday.

Banks will give loans directly to farmers giving priority to the areas suitable for wheat and maize cultivation and will pay the central bank 0.50 per cent interest against their disbursed amount.

Farmers, who own less than 0.494 acres of land, small and marginal farmers, who own 0.494 to 2.47 acres of land, and sharecroppers, could be given the loans, according to the circular.

The initial term of the scheme is June 30, 2025. However, if necessary the period may be extended.

According to the Agricultural and Rural Credit Policy, loan disbursement period for maize (kharip) is from March 1 to April 30 while loan recovery will start from August 31 of every year.

On the other hand, loan disbursement period for maize (rabi) is from October 1 to November 14 and recovery will start from June 15 every year.

Besides, loan disbursement period for wheat (with irrigation) is from November 1 to December 15 and loan collection can be started from June 30 each year.

The loan taken under this scheme cannot be used to repay any old loan, stated the circular.

If the loan is not utilised properly, or more than 4 per cent interest is taken, Bangladesh Bank would recollect the loan fund from the banks imposing an additional 2 per cent interest.

About the loan promotion campaign, the circular said that the promotion campaign should be conducted before the start of the respective crop (wheat and maize) cultivation season. In this case, the banner should be placed in an easily visible place outside the banks’ branches.

Loan-disbursing banks will have to apply for refinancing facility to Bangladesh Bank for disbursing the loans to farmers.

The circular also states that even if the banks fail to recover the loan from farmers, the banks will have to repay the loan funds collected from the Bangladesh Bank.