The central bank has set up a Tk3000 crore special refinancing scheme to help farmers cope with the financial crisis caused by the Covid-19 pandemic.
Farmers will be able to take loans from the fund on easy terms without collateral at only 4% interest, the Bangladesh Bank said in a circular published on Tuesday.
According to the circular, the second phase of the refinancing facility for the priority sector, will be in effect till 30 June 2022.
Scheduled banks interested to take part in the scheme will have to sign an agreement with the central Bank. They will be responsible for disbursing the loans to their own farmer customers.
Under the scheme, banks will be able to disburse a maximum of Tk2 lakh each to small, marginalized, and sharecropper farmers without any collateral.
At the household level, loans against personal guarantees for female cow rearing and for cow fattening will be given priority.
Banks will be able to take minimum collateral and auxiliary collateral on the basis of banker-customer relationship when providing loans to farmers in sectors other than grain and crops.
However, loans under this scheme cannot be adjusted with loans previously taken by customers. Also, defaulters will not be eligible for loans under the scheme.
Banks will be able to take money from the central bank at 1% interest under the scheme. They will have a 18 months—12 months and six months of grace period— to pay back the money with interest.
Meanwhile, farmers in the crop and grain sector will have to pay back the loans within 12 months, while farmers in other sectors will have a minimum of three months and a grace period of 18 months to pay back their loans.
The Bangladesh Bank launched a Tk5000 crore refinancing scheme last year also for Covid-19 affected farmers, upon the instruction of Prime Minister Sheikh Hasina. So far, banks have disbursed Tk4300 crore of that fund.