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Bangladesh Bank (BB) issued a fresh rescheduled policy on short-term agriculture loans on Monday aiming to boost production through facilitating farmers across the country, officials said.
Under the policy, the banks are allowed to reschedule such agriculture loans under 'banker-client' relationship through relaxation of down payment.
In some cases, such loans can be rescheduled even without any down payment, according to a notification, issued by the central bank of Bangladesh.
The farmers will be eligible for getting fresh agriculture loans without depositing any compromised amount after rescheduling such loans.
The banks may reschedule the agriculture credits after disposal of the certificate cases through mutual agreements with the clients, it added.
Such rescheduled facility will continue until December, 2019.
Similar rescheduled policy on short-term agriculture loans was announced on February 23, 2015 that was continuing until December, 2015.
"We've issued the policy in line with the bank's requirements to boost the agriculture production through providing financial support to the farmers," a senior central banker explained.
It will also help creating employment opportunities across the country, the BB official added.
"The farmers will get 'good price' of their products following the policy," another central banker told the FE.
The BB's latest move came against the backdrop of falling trend in the disbursement of farm credit during the July-October period of the current fiscal year (FY).
Meanwhile, agriculture loans disbursement dropped by nearly 14 per cent or Tk 8.53 billion in the four months of the FY 2018-19, despite the central bank's close monitoring.
Disbursement of farm credit came down to Tk 53.52 billion during the period under review from Tk 62.05 billion in the same period of the previous fiscal, the BB data showed.
Of the Tk 53.52 billion, eight public banks disbursed Tk 26.08 billion, and the remaining Tk 27.44 billion was disbursed by the private commercial banks (PCBs) and foreign commercial banks (FCBs).
The recovery of farm loans, however, rose to Tk 65.56 billion during the July-October period of FY 19 from Tk 61.78 billion in the same period of the previous fiscal.
"The BB's latest policy will help raise the recovery of such loan and also to keep the non-performing loans (NPLs) in agriculture sector stables," Md. Ali Hossain Prodhania, managing director of Bangladesh Krishi Bank (BKB), told the FE while explaining possible impact on the policy.
The volume of classified loans of farmers increased by nearly 5.0 per cent or Tk 2.53 billion to Tk 53.96 billion during the July-October period of the FY 19 from Tk 51.43 billion in the same period last fiscal.
Mr Prodhania also said disbursement of farm loan will pick up in the coming months that will also help achieve its target by the end of FY 19.
Meanwhile, all scheduled banks have achieved 24.55 per cent of their FY 19 agricultural loan disbursement target, fixed at Tk 218 billion.