ACD Circular Letter No. 02: Re-fixation of interest rate for refinance scheme on solar energy, bio-gas and effluent treatment plant

Bangladesh Bank Chief Executive P.O. Box 325 Dhaka Bangladesh Ref. No.: ACD Circular Letter No. 02 dated 11/09/2011 AD Ref. No.: ACD Circular Letter No. Agriculture Credit Department (Policy Branch) To: Chief Executive/Managing Directors All Scheduled Banks and Financial Institutions operating in Bangladesh

Dear Sir,

Subject: Re-fixation of interest rate for beneficiaries/customers regarding the provision of bank credit facilities through Microfinance Institutions (MFIs) for the installation of Solar Home Systems in the policy area under the Refinance Scheme for Solar Energy, Bio-gas, and Effluent Treatment Plant sectors.

Reference is invited to Paragraph 2.1.2 (d) of AASPD Circular No. 06 dated 03/08/2009 regarding the subject cited above.

In order to bring electricity benefits to the power-less rural areas of the country through the installation of Solar Home Systems, the following decisions have been taken regarding the distribution of bank credit through partnership with Microfinance Institutions (MFIs):

a) Interest may be charged/deducted from the beneficiary customers at a maximum rate of 12% per annum using the reducing balance method. b) Loans provided by banks for the installation of Solar Home Systems in rural areas under the aforementioned refinance scheme may be shown as Agriculture/Rural loans in the statements submitted to Bangladesh Bank.

These instructions shall be implemented immediately.

Please acknowledge receipt.

Yours faithfully,

(Sd/-) (Abdus Sobhan Talukdar) Deputy General Manager Phone No.-7120388