BB revises Tk 10,000cr refinancing scheme for agriculture

According to a circular issued by the central bank today, participating banks will receive refinancing from Bangladesh Bank at an interest/profit rate of 3 percent under the scheme.

At the farmer or customer level, the interest or profit rate has been fixed at a maximum of 7 percent at a simple interest rate. In the case of Shariah-based financing, the profit rate at the customer level will have to be determined in line with Shariah-approved investment policies, but it cannot exceed 7 percent.

The revised rate will be applicable equally to all customers, while interest or profit will be charged on the declining balance of the loan or investment, where applicable.

The participating banks will have to repay the principal and interest or profit to Bangladesh Bank within a maximum of 18 months from the date of receiving refinancing.

The central bank also revised the repayment provision. If Bangladesh Bank finds that the funds provided under the scheme, or any part thereof, have not been properly utilised, or if a participating bank charges interest/profit exceeding 7 percent against the loans/investments disbursed, the bank concerned will have to pay an additional 2 percent interest on the relevant amount as a one-time charge, in addition to the prescribed rate.

The circular further instructed participating banks to promote the scheme among farmers by displaying banners inside and outside bank branches at easily visible locations, mentioning information on loan disbursement or investment activities under the refinancing scheme at a 7 percent interest or profit rate at the farmer level.

The Bangladesh Bank circular said the other provisions of the earlier circular would remain unchanged and the revised instructions would take effect immediately, reports BSS.