Another fillip for farmers
Farmers will enjoy agriculture loans at 4 % interest as the government looks to improve the growers who will feed the country amid the coronavirus-induced financial uncertainty, the central bank said yesterday.
Banks, however, will charge 9 per cent interest on the disbursed farm loans, while Bangladesh Bank will provide the rest 5 % as subsidy.
Farmers will be eligible for the subsidised loans from April 1 this season to June 30 next year, according to a BB notice. Banks must return the 5 % interest taken from farmers against their loans disbursed this month.
Any fresh refinance scheme isn't needed for farmers at this moment as banks have to lend at least 60 per cent of their annual farm loan disbursement target for crop production, a BB official said.
The central bank has set a farm loan disbursement target of Tk 24,124 crore for the current fiscal year.
The BB on April 13 declared another stimulus package of Tk 5,000 crore for small and medium businesses and entrepreneurs in the farm sector.
The damaged clients of banks can receive an additional 20 % of their existing credit ceiling beneath the scheme.
The tenure for the loans will be 1 . 5 years, including a grace period of half a year at both banks' and clients' ends. Banks will borrow from the refinancing scheme at 1 % interest and lend at 4 %.
In another move, the central bank rolled out a refinance scheme of Tk 10,000 crore for cottage, micro, small and medium enterprises (CMSME).
This will give a sigh of relief to the cash-strapped banking sector that was worrying about implementing the Tk 20,000-crore stimulus package announced on April 12 from their own sources for the CMSME sector.
Under the refinance scheme, banks and non-bank finance institutions (NBFIs) will borrow money in the kind of working capital at 4 % interest from the BB, while end-users are certain to get the funds at 9 %.
But to take pleasure from the refinance scheme, banks will have to provide at least 50 % of every loan to the CMSME sector borrowers from their own sources.
The duration of the refinance scheme is 3 years and lenders must sign a participation agreement with the BB to take funds from the scheme.
Sick and troubled lenders won't get active support from the fund directly as their applications will be verified on a case-to-case basis.
If lenders disburse funds to other sectors breaching regulations, the central bank will impose yet another 2 % penal interest on them.
The banks and NBFIs will be permitted to get a pastime subsidy of 5 per cent for the loans given from their own sources.
The lenders should be able to disburse no more than 10 % of their outstanding loans by December 31 this past year to the CMSME sector within a fiscal year.
If needed, the BB can raise or lower the ceiling to be able to cover as many entrepreneurs as possible, according to guidelines.
The manufacturing and services sub-sectors would get priority under the package, while business and trade-based micro and small organizations would also meet the requirements.
In another development, the BB yesterday extended the deadline for submitting audited financial statements of banks to June 30. According to the Banking Companies Act 1991, all banks need to submit their financial statements to the central bank within April each year.
As much lenders are yet to get ready their financial statements as a result of the ongoing restrictions on movement, the BB extended the deadline in consultation with the federal government.
