Tk 3,000cr new low-cost fund for farmers

Bangladesh Bank yesterday unveiled a fresh Tk 3,000 crore refinance scheme to provide low-cost loans to farmers with a view to supporting farm production amid the coronavirus pandemic.

The new fund comes after the tenure of the Tk 5,000 crore refinance scheme for the agriculture sector expired in June. The new refinance package will expire on June 30 next year, said the BB in a circular.

Farmers will get loans at a 4 per cent interest rate, and banks will access the fund at a 1 per cent interest. The tenure of loans is 18 months.

Producers engaged in cultivating food and cash crops, vegetables, and tuber crops will get financing from the package. Besides, growers will receive loans to cultivate fruits and flowers, aquaculture, poultry and livestock.

Banks will also be able to lend for agricultural, irrigation and seed production, the BB said.

The lenders will have to ink a participation agreement with the central bank to access the fund and will have to disburse the loans through their own network.

Banks can disburse the highest Tk 10 crore to a single borrower.

The refinancing package brings some good news for small and marginal farmers. They will get up to Tk 2 lakh without any collateral, according to the notice.

"Banks can also finance dairy farming and bull fattening at the household level against the personal guarantee."

However, existing borrowers cannot adjust their previous loans with the funds from the new scheme. Defaulters are not eligible for loans from the package as well.

Banks will give out at least 30 per cent of the targeted amount under the package to the crop sector.

In April last year, the central bank rolled out a stimulus package amounting to Tk 5,000 crore after the coronavirus pandemic hit the country. More than 90 per cent of the fund was disbursed as of August.

As the tenure of the fund expired in June, the central bank introduced the new scheme to help farmers.