ACD-1 Circular No. 01: Refinance Scheme for Agricultural and Rural Sector to Increase Agricultural Production and Employment Generation

2011

Bangladesh Bank
(Central Bank of Bangladesh)
Head Office
Motijheel, Dhaka-1000
Bangladesh.

Agricultural Credit Department-1

ACD Circular No.-01
Date: 25 Joishtha 1433
08 June 2026

Managing Director/Chief Executive Officer
All Scheduled Banks Operating in Bangladesh.

Dear Sir,

With reference to the policy for the formation and operation of a 10,000 crore Taka refinance scheme aimed at increasing agricultural production in the country, ensuring food security through economic activities in rural areas, and generating employment.

Agriculture plays a crucial role in increasing agricultural production, creating rural employment, and ultimately achieving economic growth in the country, which is essential for ensuring food security. Even in coping with the adverse effects of environmental disasters and climate change, the role of agriculture is immense. It is possible to alleviate poverty and improve the quality of life of people in the vast rural Bangladesh through the development of the agricultural sector. Considering this context, a decision has been taken to form a 10,000 (ten thousand) crore Taka refinance scheme to increase agricultural production alongside ensuring food security for the country's growing population, and to play a role in generating employment and alleviating poverty through financing income-generating activities in rural areas. The following policy will be followed in the operation of the said refinance scheme:

1. Name of the Scheme: Refinance Scheme for the Agricultural and Rural Sector to Increase Agricultural Production and Generate Employment to Ensure Food Security in the Country.

2. Amount of Fund under the Scheme: 10,000 (ten thousand) crore Taka, Revolving.

3. Source: Own funds of Bangladesh Bank.

4. Tenure of the Scheme: The tenure of this scheme will be 05 (five) years.

5. Management of the Scheme:
   a) The said scheme will be operated by the Agricultural Credit Department-2 of the Head Office of Bangladesh Bank, and for this purpose, the said department may issue necessary instructions regarding conditions/rules to be followed. The loan borrowing by scheduled banks from the scheme and the corresponding repayment activities must be conducted by the Head Office/Principal Office of the respective bank. b) Annual allocations will be provided during the tenure of the scheme to facilitate the banks. Participating banks will distribute the allocated funds to the customer level during the year. c) Agricultural and rural loans/investments distributed under this refinance scheme can be shown by the banks as distribution against their annual targets. d) The revolving fund of this scheme will remain preserved in a separate account until the end of the scheme's tenure. Financial transaction activities with participating banks will be conducted through the said account.

6. Execution of Loan Agreement and Fund Allocation:
   a) Banks covered under the Agricultural and Rural Credit Policy may avail themselves of the refinance facility under this scheme by executing a Participation Agreement with the Agricultural Credit Department-2, Head Office, Bangladesh Bank, Dhaka. b) Funds will be allocated to banks by the Agricultural Credit Department-2 based on the demand of participating banks, achievement of annual agricultural and rural loan distribution targets (Performance), loan distribution capacity, etc. Bangladesh Bank may subsequently redefine the amount of allocated funds if necessary. c) After the distribution of loans to the farmer/customer level, the participating banks will submit refinance claims for review, and subsequently, an amount equal to the allocated funds will be refunded. d) Participating banks must submit the refinance application form in the prescribed format (Attached Form-1) to Bangladesh Bank by the 15th of the following month against the loans/investments distributed under this scheme. If the application is not submitted within the specified time, the application must be submitted within the next maximum 2 (two) months mentioning the reason for delay; otherwise, the said loan/investment will not be considered for refinance under this scheme.

7. Loan Distribution or Investment at the Farmer Level:
   a) Participating banks under this scheme must ensure loan distribution to farmers/customers through their own network, i.e., bank branches, sub-branches, agent banking, contract farming, group lending, appointing any company/institution as agent/intermediary, etc. b) Loans/investments up to a maximum of 5.00 lakh Taka can be distributed/invested solely without collateral (only against crop-hypothecation) for crop and harvest cultivation for small, marginal, and sharecropper farmers. c) Loans can be provided against crop-hypothecation for cultivation on land up to a maximum of 5 acres in the crop and harvest sector according to the Agricultural and Rural Credit Policy. For cultivation on land larger than the said amount, banks will determine whether to provide loans/investments according to their own loan/investment policies and prevailing conditions, based on the bank-customer relationship in accordance with Bangladesh Bank's existing collateral acquisition policy. d) To ensure that a larger number of genuine/marginal farmers benefit under this refinance scheme, the maximum limit for new loans/investments for a customer will be 30 (thirty) lakh Taka in the crop-harvest sector, 15 (fifteen) lakh Taka in other rural loan sectors including income-generating activities, 20 (twenty) lakh Taka in the agricultural machinery sector, and 1 (one) crore Taka in the livestock sector. e) To facilitate financing for the distribution of loans/investments for women and marginal farmers, alternative collateral (e.g., personal/social/group collateral, etc.) can be used instead of existing land or immovable property (similar to CSME loans/investments). f) Loans/investments taken under this scheme must not be used in any way for the consolidation of the customer's old loans/investments. g) If any farmer/customer has loan defaults in any bank or financial institution, they will not be considered eligible to receive loans under this scheme. Furthermore, a farmer/customer will be eligible for the benefits of the said scheme a maximum of 3 (three) times. h) Banks must distribute loans or invest for farmers according to the loan categories mentioned in the Agricultural and Rural Credit Policy (including at least a 20% increase/decrease where applicable).

8. Interest/Profit Rate:
   a) Participating banks under this scheme will receive refinance facilities from Bangladesh Bank at an interest/profit rate of 4%. b) The interest/profit rate at the farmer/customer level will be a maximum of 8% (simple interest rate). In the case of Shariah-based financing, the profit rate charged at the customer level must be determined under the approved investment policy; however, it will not exceed 8%. The said interest/profit rate will apply equally to all customers. Where applicable, interest/profit must be levied on the outstanding status of the customer's loan/investment.

9. Sectors for Loans/Investments: Loans can be distributed or investments made under this scheme in all crop-harvest, fisheries, livestock, agricultural and irrigation machinery sectors, and other rural loan sectors including income-generating activities covered under the existing annual Agricultural and Rural Credit Policy.

10. Tenure of Loans/Investments:
    a) The maximum tenure of distributed loans/investments, considering the sector and where applicable, will be 18 (eighteen) months including a 03 (three) month grace period. b) Participating banks must repay the principal and interest/profit (at the 4% interest/profit rate determined by Bangladesh Bank) within a maximum of 18 (eighteen) months from the date of receiving the refinance. c) The refinance scheme taken by participating banks will be revolving, meaning the equal amount of funds allocated to the bank will be revolving for the year during the scheme's tenure.

11. Method of Refinance Application to Bangladesh Bank:
    a) After starting loan distribution or investment at the farmer level, participating banks must apply for refinance on a monthly basis. b) The concerned participating bank must apply to the Director (ACD), Agricultural Credit Department-2, Head Office, Bangladesh Bank, along with the following information/documents to obtain refinance from Bangladesh Bank after distributing loans or investing at the farmer level:
    ⇒ Certificate of actual distribution.
    ⇒ Consolidated statement of distributed loans (Attached Form-1); ⇒ Letter of commitment for loan repayment (DP Note); ⇒ Other relevant information.

12. Repayment Method:
    a) The funds allocated to participating banks must be repaid to Bangladesh Bank with interest/profit within the prescribed tenure. b) All liabilities for the recovery of loans/investments distributed at the farmer level will rest with the distributing bank. In this regard, the recovery of loans/investments cannot be linked to the dues of Bangladesh Bank. c) If the balance of loans/investments taken from Bangladesh Bank under the scheme is not repaid within the prescribed tenure, it will be recovered/adjusted by adjusting the current account of the concerned participating bank maintained with Bangladesh Bank. d) If Bangladesh Bank is satisfied that the funds provided under the scheme or any part thereof were not used properly, or if more than 4% interest/profit was collected against the distributed loans/investments, Bangladesh Bank will levy an additional 2% interest/profit on the said amount at the prescribed rate and collect it as a lump sum.

13. Reporting and Monitoring:
    a) Separate accounts must be maintained for each loan or investment distributed under this scheme. b) After obtaining refinance from Bangladesh Bank, the capitalized statement of loans or investments (Attached Form-2) must be submitted to the Agricultural Credit Department-2 of Bangladesh Bank on a monthly basis (within 07 working days after the end of the month) for intensive monitoring. c) Participating banks must have their own specific action plans and monitoring methods to ensure the proper use of loans/investments at the farmer level. Participating banks must regularly monitor issues related to distribution, recovery, and proper use of loans/investments at the customer level. d) Bangladesh Bank will monitor and evaluate the proper use of loans at the farmer level through periodic field inspections and verification of information.

14. Promotion and Farmer Selection for Loan Distribution or Investment:
    a) Banks must install banners inside and outside (in easily visible places) of bank branches mentioning information about the loan distribution or investment program at the farmer level at an interest/profit rate of 8% under the refinance scheme. b) To encourage farmers to take loans/investments under this scheme, the concerned bank branch must run special campaigns through the concerned bank branch before the start of the relevant crop cultivation season. c) To identify genuine farmers, assistance from local agricultural extension, Department of Fisheries, Department of Livestock Services officials, or government information related to farmers can be obtained if necessary.

15. Other Conditions:
    a) The concerned bank will distribute loans or invest considering the limit of fund availability from Bangladesh Bank, and in the case of loan distribution or investment, the participating bank will follow existing rules and regulations. b) Other policies issued and currently followed by Bangladesh Bank, such as the Agricultural and Rural Credit Policy, e.g., collateral, time period for application receipt and processing, determination of borrower eligibility, loan distribution, proper use of loans, supervision, and recovery process, will be followed as usual. c) In the case of the said refinance, the participating bank will provide necessary information, documents, and copies of deeds as required by Bangladesh Bank. Bangladesh Bank may make necessary additions, deletions, and modifications to the conditions of the aforementioned policies regarding refinance from time to time.

Banks are advised to execute a Participation Agreement with the Agricultural Credit Department-2 within 1 (one) month after the issuance of this circular to participate in this refinance scheme by following the above policies and conditions.

This instruction is issued under the powers conferred by Section 45 of the Bank Company Act, 1991.

Appendix: 2 (two) pages.

Yours faithfully,

(Signature)
(Debashish Sarkar)
Director (ACD-1)
IP: 0255665001-6/2017
Email: debashish.sarker@bb.org.bd

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Attached Form-1
Consolidated Statement Regarding Refinance Claims under the Refinance Scheme Formed for the Agricultural and Rural Sector to Increase Agricultural Production and Generate Employment to Ensure Food Security in the Country (Monthly Basis)

Name of the Bank:
Name of the Month:
Fiscal Year:

(In Crore Taka)

Branch Name	Name and Mobile Number of Farmer/Customer	Amount of Distributed Loan/Investment	Interest/Profit Rate at Farmer/Customer Level	Date of Loan Distribution/Investment	Tenure of Loan/Investment	Sector of Loan Distribution/Investment	Amount of Refinance Claimed Against Distributed Loan or Investment
Total Amount

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Attached Form-2
Capitalized Statement of Loan Distribution under the Refinance Scheme Formed for the Agricultural and Rural Sector to Increase Agricultural Production and Generate Employment to Ensure Food Security in the Country (Monthly Basis)

Name of the Bank:
Period of Statement: -- / -- / ---- Date up to

(In Lakh Taka)

Name of District	Name of Upazila	Name of Branch	Amount of Allocation	Amount of Approved Loan/Investment	Amount of Distributed Loan/Investment					Rate of Loan Distribution/Investment Compared to Allocation (%)	Number of Sharecroppers Receiving Loan/Investment	Number of Farmers/Customers Receiving Loan/Investment
					Crop-Harvest	Fisheries	Livestock	Agricultural Machinery	Other Rural Loans including Income Generating Activities	Total		Women	Men	Total
Grand Total