Bangladesh Bank lowers interest rate on farm loans to 4% amid coronavirus crisis

Bangladesh Bank has lowered interest rate on agricultural loans to four percent from nine percent and the new rate will last until June 30, 2021.

The central bank will provide the remaining five percent in subsidies to the banks disbursing the loans to all crop and grain farmers, according to an order the financial market regulator issued on Monday.

The circular read, “Every year the central bank provides agricultural and rural loans to attain the Sustainable Development Goals, poverty alleviation and remove hunger from the country. The banks have allotted Tk 241.24 billion for the farmers in the 2019-20 fiscal. The maximum interest rates for these loans are nine percent.

"But to resolve the crisis due to the outbreak of the coronavirus, the interest rate has been lowered to four percent in the grains and crops sector under the stimulus package for the farmers. All farmers are eligible for loans under the stimulus package.”

“The interest rate has been lowered following the instructions of Prime Minister Sheikh Hasina with an aim to keep the food production and supply normal in the future amid the pandemic,” said Kazi Saidur Rahman, the executive director of Bangladesh Bank

The rate is already four percent for production of crops that are mainly imported, such as pulses, oilseeds, spices and maize. Additionally, agricultural loans will be distributed for cultivation of all grains including paddy, wheat, cash crops, vegetables and tuber crops mentioned in the Agriculture and Rural Credit Policy and Programme at the same rate, according to central bank directives.