Agricultural loan interest reduced: 4% in crops.The interest rate on agricultural loans has been reduced for the next 15 months. The maximum interest rate for all types of crop production will be 4%. However, additional 5% interest will be paid as subsidy to the banks from Bangladesh Bank. From April this year to June next year, the interest rate of all agricultural loans disbursed from the bank will be covered under this facility.
Relevant sources of Bangladesh Bank have given this information.
According to Bangladesh Bank sources, targets are given for disbursement of agricultural loans every year. Agricultural credit policy is made with the target of banks. This year, a target has been set to disburse such agricultural loans of Tk 24,000 crore. The amount of agricultural loan disbursed till March 31 will not be covered under this facility.
The amount of agricultural loans that will be disbursed from this April to June next year will come under this facility. The banks will be able to charge maximum 4% interest from the farmers on the amount of agricultural loans to be disbursed during the period under review. An additional 5% interest will be subsidized to the banks. By the way, according to the agricultural loan policy, the maximum interest on agricultural loan will be 9%.
A directive issued by Bangladesh Bank on April 28 said that the banks should ensure that the loan money could not be used outside the sector in any way. They also have to take responsibility for debt collection. Each bank has to form a special monitoring team to monitor this matter. The central bank has to be informed about the loan disbursement every month.
To address the negative impact of coronavirus in the agricultural sector, the government will provide loans to farmers at 4% interest. This loan will be given directly to the farmers for the production of all kinds of vegetables and agricultural products including paddy and wheat. From April 1, interest at the rate of 4% will have to be levied on the loans that have been disbursed. However, if any loan installment is outstanding, the loan cannot be given under this scheme. In that case interest has to be charged at the conventional rate.
The country has been on a public holiday since March 26 to prevent the spread of coronavirus. Due to this human movement and all kinds of economic activities are stopped. As a result, farmers are not able to market their produce. As a result, farmers are not getting a fair price for their produce. As a result, the farmers are suffering financially. This may discourage farmers from cultivating next season or they may not go into production due to financial crisis. The central bank has taken this initiative to give special incentives to the farmers out of such apprehension.
At present, farmers are given loans at 4% interest for cultivation of pulses, oilseeds, spices and maize, the circular said. This program will also continue. Banks will disburse this from their own funds under the rural and agricultural credit program. If you apply to Bangladesh Bank later, the central bank will pay the remaining amount of interest to the concerned commercial bank.
Dhaka Bureau Chief, April 28,2020