Loan rules relaxed to facilitate agro, microcredit disbursement in Bangladesh

Last updated: November 19, 2014

Dhaka, Bangladesh (BBN)- The central bank of Bangladesh has relaxed its loan provisioning policies to facilitate the disbursement of agricultural and micro-credit across the country, officials said.
Under the relaxations, the commercial banks will have to maintain provisioning for all unclassified short-term agricultural and micro-credits at 2.5 per cent instead of 5.0 per cent earlier.
Provisioning for classified as ‘sub-standard’ and ‘doubtful’ will remain unchanged at 5.0 per cent, according to a circular issued by the Bangladesh Bank (BB) on Tuesday.
Besides, the provisioning for classified as ‘bad/loss’ will be maintained at 100 per cent, the circular said.
“The central bank has relaxed the loan provisioning policies aiming to expedite disbursement of agricultural loans and micro-credits through encouraging participation of the banks,” a BB senior official explained.
The BB has taken the latest measures against the backdrop of declining trend in agricultural loan disbursement in the first quarter (Q1) of the current fiscal year (FY) 2014-15.
Disbursement of agricultural loan fell by nearly 4.0 per cent to BDT 27.50 billion in the Q1 of the FY ’15 from BDT 28.61 billion in the corresponding period of the previous fiscal, the BB data showed.
All scheduled banks have achieved nearly 18 per cent of their annual agricultural loan disbursement target for FY 15, fixed at BDT 155.50 billion.

BBN/SSR/AD-19Nov14-8:40 am (BST)

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