Farmers to get loans at 4% concessional interest for 15 months

Farmers will get agricultural loans at 4 percent concessional interest in the crop sector to mitigate the crisis brought on by the novel coronavirus.

The Bangladesh Bank issued a circular making agricultural loans cheaper for the next 15 months, starting from April 1 this year to June 30, 2021.

Banks currently disburse farm loans at 9 percent interest.

During this 15-month period, banks will provide farm loans at the concessional interest, and after June 30 next year, they will go back to charging regular interest, reads the circular.

The central bank will provide the remaining 5 percent interest as subsidy to the bank.

Currently, farmers get concessional loans for growing selective crops, such as maize, lentils, oilseeds and spices. But under the new scheme, farmers will get concessional loans for other crops like rice, wheat and others, following the agriculture and rural credit policy.

In the first eight months of the current fiscal year, banks disbursed Tk15,000 crore in agricultural loans under the agricultural and rural credit policy, meeting 62.56 percent of their annual target.

Earlier, the government announced a Tk5,000 crore stimulus package to support farmers during the coronavirus crisis. 

The Bangladesh Bank has formed a refinancing fund of that amount, setting a maximum duration of 18 months with a 6-month grace period. The loan under the package will be given at 4 percent interest, and the remaining 5 percent will be subsidised by government.