Bangladesh Bank Headquarters

Dhaka, Bangladesh (BBN) – The central bank of Bangladesh has relaxed its loan provisioning policies further to facilitate agriculture and micro-credits disbursement, officials said.

Under the relaxations, the banks will have to maintain general provisioning for all unclassified short-term agriculture and micro-credits at 1.0 per cent instead of 2.5 per cent earlier. It was 5.0 per cent in 2014.

Provisioning for classified as ‘sub-standard’ and ‘doubtful’ will remain unchanged at 5.0 per cent, according to a notification, issued by the by the Bangladesh Bank (BB), the country’s central bank, on Wednesday.

Besides, the provisioning for classified as ‘bad/loss’ will be maintained at 100 per cent, it added.

Talking to BBN, a BB senior official said the central bank relaxed the loan provisioning policies aiming to expedite disbursement of agriculture and micro-credits through encouraging participation of the banks.

He also said the relaxed provisioning requirement for farm loans to make it cheaper in the near future. “It will also help ensuring the food security through expediting overall agriculture productions.”

The central bank has taken measures to facilitate flood-affected farmers and entrepreneurs with providing its policy support, he added.

As part of the moves, the central bank had advised all the banks to follow the fresh policy on rescheduling short-term agriculture, micro-credit and SME loans to help the flood-affected borrowers continue their economic activities.

The banks are now allowed to reschedule such loans based on ‘banker-client’ relationship through relaxation of down payment requirements, according to the latest policy, issued by the BB on August 22, 2017.

Under the policy, the flood-affected farmers and entrepreneurs will be eligible for getting fresh loans without depositing any compromised amount after rescheduling such loans.

Such rescheduled facility will continue until June 30 next year.

Meanwhile, agriculture loan disbursement grew by more than 35 per cent in the first two months of the current fiscal year (FY) following strengthening monitoring and supervision by the central bank.

Disbursement of farm credit rose to BDT 27.94 billion during the July-August period of the FY 2017-18 from BDT 20.63 billion in the same period of the last, the BB data showed.

Of BDT 27.94 billion, eight state-owned banks disbursed BDT 8.09 billion, and the remaining BDT 19.85 billion was disbursed by the private commercial banks (PCBs) and foreign commercial banks (FCBs).

All scheduled banks have achieved nearly 13.70 per cent of their annual agricultural loan disbursement target for FY 18, fixed at BDT 204 billion.