Farmers will not pay any service charge while taking agriculture loans from the banks in line with the latest decision of the Bangladesh Bank.
The new policy will come into effect from this fiscal year, meaning that the farmers will count only nine per cent interest rate set by the central bank to take farm loans from the banks, a BB official told New Age on Thursday.
The farmers are now forced to pay application processing and evaluation fee including Tk 600 as stamp charge to the banks while taking farm loans.
The central bank will unveil its farm loan policy for FY 2017-18 within third week of this month when it will give the new instruction to the banks.
The central bank has set the farm loan disbursement target for banks at Tk 20,400 crore for FY18, increasing by 16.23 per cent, from Tk 17,550 crore for FY17.
The banks crossed their annual target of farm loan disbursement in 11 months (July-May) of FY18 against the backdrop of a decreased credit demand from the industrial sector.
The banks distributed Tk 18,935.57 crore in farm loans in the July-May period of FY 2016-17, which was 107.89 per cent of their annual farm loan disbursement target.
The central bank has not prepared the achievement figure of FY17 as it is yet to get the farm loan disbursement figure of June from the banks, the BB official said.
He, however, said that the amount of disbursed farm loan might cross Tk 20,000 crore in the just concluded fiscal year.
The central bank has also brought some major changes in previous farm loan policies as the banks will have to disburse at least 10 per cent loans of their annual farm loan target to the livestock sector from FY18.
The BB will also allow the banks to disburse the term loan to promote the country’s fisheries sector.
The new policy will also give a relaxation for the nine new banks disbursing five per cent farm loans on mandatory basis as they will be allowed to distribute 3.50 per cent agriculture loans of their outstanding credit from previous limit of five per cent.
Nine new banks had been pursuing the central bank for long to withdraw many of the conditions, including disbursement of five per cent farm loan out of their outstanding loans, under which they were given licences in 2012.
According to the BB policy, every bank has to disburse at least two per cent of their total lending in the agricultural sector.
If the central bank sets the two per cent ceiling for the fourth generation banks, the target of farm loan disbursement of the banks will decrease this fiscal year than that of FY17, the official said.
The BB, however, may allow the nine banks to disburse 2 per cent farm loans of their total outstanding credit from FY19, the central banker said.
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Banking