Bangladesh Bank will provide half of the Tk 20,000 crore stimulus package announced by the government for the cottage, micro, small and medium enterprises sector -- to deal with the economic fallout caused by the coronavirus pandemic.
The decision was taken considering the liquidity crisis of the banks, the central bank said in a circular issued to commercial banks today.
For this, the central bank has rolled out a refinance scheme of Tk 10,000 crore. Under the scheme, banks and non-bank financial institutions (NBFIs) will take out funds in the form of working capital at 4 percent interest from Bangladesh Bank, which the end-users will get at 9 percent interest.
The duration of the refinance scheme is three years. Lenders will have to sign a participation agreement with the central bank to take out the fund under the scheme.
If lenders disburse funds to other sectors breaching the regulations, the central bank will impose an additional two percent interest on them.
Lenders will have to take all responsibilities to recover the loans, which will be disbursed from the fund.
LOANS FOR FARMERS AT 4 PERCENT INTEREST
In a separate move, the central bank said farmers can secure farm loans at 4 percent interest to cultivate crops amidst the ongoing shutdown due to the coronavirus pandemic.
Banks, however, will enjoy 9 percent interest on their disbursed farm loans as the central bank will provide 5 percent interest subsidy to them.
Farmers will be permitted to obtain the subsidised loans from April 1 this year to June 30, 2021, according to a central bank notice.
Any fresh refinance scheme is not needed for farmers at this moment as banks have to give out at least 60 percent of their annual farm loan target to the crop sector, a Bangladesh Bank official said.