Farmers will enjoy agriculture loans at 4 per cent interest as the government looks to perk up the growers who will feed the nation amid the coronavirus-induced economic uncertainty, the central bank said yesterday.
Banks, however, will charge 9 per cent interest on their disbursed farm loans, while Bangladesh Bank will provide the rest 5 per cent as subsidy.
Farmers will be entitled to the subsidised loans from April 1 this year to June 30 next year, according to a BB notice. Banks will have to return the 5 per cent interest taken from farmers against their loans disbursed this month.
Any fresh refinance scheme is not needed for farmers at this moment as banks have to lend at least 60 per cent of their annual farm loan disbursement target for crop production, a BB official said.
The central bank has set a farm loan disbursement target of Tk 24,124 crore for the current fiscal year.
The BB on April 13 declared another stimulus package of Tk 5,000 crore for small and medium businesses and entrepreneurs in the farm sector.
The affected clients of banks can receive an additional 20 per cent of their existing credit ceiling under the scheme.
The tenure for the loans will be 18 months, including a grace period of six months at both banks' and clients' ends. Banks will borrow from the refinancing scheme at 1 per cent interest and lend at 4 per cent.
In a separate move, the central bank rolled out a refinance scheme of Tk 10,000 crore for cottage, micro, small and medium enterprises (CMSME).
This will give a sigh of relief to the cash-strapped banking sector that was fretting about implementing the Tk 20,000-crore stimulus package announced on April 12 from their own sources for the CMSME sector.
Under the refinance scheme, banks and non-bank financial institutions (NBFIs) will borrow funds in the form of working capital at 4 per cent interest from the BB, while end-users will get the funds at 9 per cent.
But to enjoy the refinance scheme, banks will have to provide at least 50 per cent of each loan to the CMSME sector borrowers from their own sources.
The duration of the refinance scheme is three years and lenders will have to sign a participation agreement with the BB to take funds from the scheme.
Sick and troubled lenders will not get support from the fund directly as their applications will be verified on a case-to-case basis.
If the lenders disburse funds to other sectors breaching regulations, the central bank will impose an additional 2 per cent penal interest on them.
The banks and NBFIs will be allowed to get an interest subsidy of 5 per cent for the loans given from their own sources.
The lenders will be able to disburse a maximum of 10 per cent of their outstanding loans as of December 31 last year to the CMSME sector in a single fiscal year.
If needed, the BB can raise or lower the ceiling in order to cover as many entrepreneurs as possible, according to guidelines.
The manufacturing and services sub-sectors would get priority under the package, while business and trade-based micro and small firms would also be eligible.
In another development, the BB yesterday extended the deadline for submitting audited financial statements of banks to June 30. As per the Banking Companies Act 1991, all banks have to submit their financial statements to the central bank within April every year.
As many lenders are yet to prepare their financial statements because of the ongoing restrictions on movement, the BB extended the deadline in consultation with the government.