Re-financing scheme: Loan disbursement time may be extended until December

The period of loan disbursement by the banks concerned under the central bank’s ‘special incentive re-financing scheme for the agriculture sector’ is likely to be extended until December next, sources said.

The time might be extended as disbursement of special loan to the farmers concerned has been going on at a snail’s pace, they added.

As per the participation agreement signed with Bangladesh Bank (BB), the banks concerned will have to disburse loan within September 30, 2020.

Over four months have already passed after launching the stimulus package amid the Covid-19 pandemic. But the disbursement of special incentive loans to the farmers by the banks has remained very low, said a senior official of the Agricultural Credit Department.

In such circumstances, the loan disbursement time may be extended by two to three months from the existing period, he added. Small and medium level farmers in rural areas producing flowers, fruits, grains, fishes, poultry, dairy farms and livestock are eligible for special loan from the refinancing scheme, according to a circular of the central bank.

Only Tk 5.0 billion loan under the refinance scheme has been disbursed by the banks until July last, the official also said.

The fund size of special incentive re-financing scheme for the agriculture sector is Tk 50 billion.

In April, the prime minister declared the stimulus package for the agriculture sector with an aim to boost the farm sector. The rate of interest was initially announced at 5 per cent.

Later, the central bank introduced the special refinance scheme with its own fund at 4 per cent interest rate for the beneficiaries.

The bank’s regulator disburses loan from the scheme to the banks under participation agreement at 1.0 per cent interest, according to a BB circular issued on April 13, 2020.

Till July 2020, a total of 43 banks signed the participation agreement to get funds under the scheme.

The banks received 18,377 loan applications until July. Of the applications, some 17,980 have been given approval by the banks. Over Tk 4.97 billion loan has been disbursed as of July 2020, a BB document mentioned.

The number of beneficiaries including farmers and farms stood at 17,801, the document added.

The repayment period of the loan by the banks is 18-month with six-month grace period from the date of receiving re-financing fund.

The provision is same for the client level. They have to pay the loans within maximum 18-month with 6-month grace period from the date of disbursement of loan.

The BB has set an agriculture credit target of Tk 262.92 billion for the banks to be disbursed during the current fiscal year (FY’21).

The loan was estimated to be 8.99 per cent higher than that of the last fiscal year’s target, according to the agriculture and rural credit policy and programme for the FY 2020-21.

Of the total target, Tk 31.95 billion will be disbursed by six state-owned commercial banks during the FY ’21 while two specialised development banks will provide Tk 78.50 billion to the farmers.

Besides, 39 private commercial banks out of 41 will lend Tk 145.46 billion while nine foreign commercial banks will disburse Tk 7.01 billion.