Banks to provide more loans at 4% interest for import substitution crops

The Bangladesh Bank has asked banks to increase their credit disbursements to 4% interest under a subsidy scheme for crops such as lentils, oilseeds, spices and maize.

In a circular issued on Sunday, the central bank said that a large amount of foreign currency is needed every year to import such products and an instruction was issued to reduce such import costs.

The regulator sent the circular to the general managers of all scheduled banks.

According to the circular, private banks alongside public banks have already disbursed agricultural loans under the agricultural and rural credit target at a subsidized interest rate of 4% backed by the central bank for substitute products. to imports.

However, if banks still incur interest losses, they will be able to show this loss in their corporate social responsibility (CSR) books.

The new guidelines state that the central bank will set an annual target for the amount of subsidy on loans for import alternative crops. At the same time, he will also monitor the loan disbursement status of the respective bank branches.

In addition, banks can apply to the central bank for interest compensation on loans disbursed to import alternative products, by submitting loan disbursement details with their application. 10% of these loans from Bangladesh Bank will be verified on the spot.

The circular says that in all regions where the production of import substitution crops is high, the distribution of loans through bank branches will be increased.

“In places where loans are disbursed at an interest rate of 4%, a written banner should be affixed there. If necessary, the help of the local agricultural extension office should be sought to identify the real farmers,” adds the circular of the central bank.

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