ACD Circular No. 05: Refinance Scheme of Taka 1000.00 Crore for Increasing Production of Wheat and Maize

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

ACD Circular No. - 05

Date: 10 Bhadra, 1429 25 August, 2022

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

Dear Sir,

Regarding the Policy Guidelines for the Formation and Operation of a Taka 1,000.00 (One Thousand) Crore Refinance Scheme to Increase the Production of Wheat and Maize.

Despite sufficient demand for wheat and maize in the country, the production volume of these crops is not adequate. Consequently, a significant amount of foreign exchange is spent annually on importing wheat, maize, and food items produced from them to maintain normal supply in the country. In this regard, a decision has been taken to form a refinance scheme of Taka 1,000.00 (One Thousand) Crore to increase the production of wheat and maize in the country. The following policy guidelines will be followed for the operation of the said refinance scheme:

1. Name of the Scheme: Special Refinance Scheme to Increase the Production of Wheat and Maize.
2. Amount of Fund under the Scheme: Taka 1,000.00 (One Thousand) Crore.
3. Source: Own funds of Bangladesh Bank.
4. Tenure of the Scheme: Until 30 June, 2025. The tenure of the scheme may be extended if necessary.
5. Execution of Loan Agreement and Allocation of Funds: (a) To avail loan facilities under the refinance scheme, interested banks covered under the Agriculture and Rural Credit Policy must execute a Participation Agreement with the Agriculture Credit Department, Head Office, Dhaka, Bangladesh Bank. (b) Funds will be allocated in favor of the said banks based on their demand on a fiscal year basis. Bangladesh Bank may, if necessary, re-determine the amount of allocation at any time. (c) After reviewing the submitted refinance claims at the farmer level, the refinance amount equivalent to the allocated funds will be provided sequentially.

Continuing Page-02 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd

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Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh. -02-

(d) Up to a maximum of Taka 2.00 Lakh as collateral-free loans (only against crop liability) may be distributed under this scheme to landless farmers (whose land area is less than 0.49 acres), small and marginal farmers (whose land area is from 0.49 acres to 2.49 acres), and sharecroppers, as defined in paragraph 6.19.6 of the Agriculture and Rural Credit Policy for the fiscal year 2022-2023. (e) For other farmers excluding those mentioned in serial (d) above, the concerned bank may determine the loan amount after necessary verification and selection based on the Banker-Customer relationship and distribute it under this scheme. (f) Old loans cannot be consolidated in any way using loans taken under this scheme. (g) If any farmer/customer is identified as a defaulter according to the CIB report, they will not be considered eligible to receive loans under this scheme.

6. Loan Distribution at Farmer Level: (a) Participating banks under this scheme must ensure direct loan distribution at the farmer level through their own network. (b) Priority must be given to loan distribution under this scheme in areas suitable for wheat and maize cultivation. (c) Banks may distribute loans to farmers in accordance with the regulations for wheat and maize cultivation loans mentioned in the Agriculture and Rural Credit Policy.

Continuing Page-02 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd

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50119

Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh. -02-

(d) Up to a maximum of Taka 2.00 Lakh as collateral-free loans (only against crop liability) may be distributed under this scheme to landless farmers (whose land area is less than 0.49 acres), small and marginal farmers (whose land area is from 0.49 acres to 2.49 acres), and sharecroppers, as defined in paragraph 6.19.6 of the Agriculture and Rural Credit Policy for the fiscal year 2022-2023. (e) For other farmers excluding those mentioned in serial (d) above, the concerned bank may determine the loan amount after necessary verification and selection based on the Banker-Customer relationship and distribute it under this scheme. (f) Old loans cannot be consolidated in any way using loans taken under this scheme. (g) If any farmer/customer is identified as a defaulter according to the CIB report, they will not be considered eligible to receive loans under this scheme.

7. Interest/Profit Rate: (a) Participating banks under this scheme will receive refinance facilities from Bangladesh Bank at a determined interest/profit rate of 0.50%. (b) The interest/profit rate at the farmer level will be a maximum of 4% (simple rate). The said interest/profit rate will apply equally to all customers.

8. Tenure of Loan: (a) The tenure of loans distributed at the farmer level will be determined in accordance with the production calendar and repayment schedule of wheat and maize cultivation mentioned in the 'Production Calendar and Loan Repayment Schedule' of the Agriculture and Rural Credit Policy. (b) Participating banks will repay the principal and interest/profit (at the interest/profit rate of 0.50% determined by Bangladesh Bank) within a maximum of 8 months from the date of receiving refinance.

9. Refinance Application Procedure: (a) After starting loan distribution at the farmer level, participating banks must apply monthly for receiving refinance funds. (b) The concerned bank, having distributed loans at the farmer level, will apply to the Director, Agriculture Credit Department, Head Office, Bangladesh Bank for receiving refinance from Bangladesh Bank along with the following necessary information/documents:

   • Certificate of actual distribution;
   • Integrated statement of distributed loans (according to Annexure Table-1);
   • Letter of commitment for loan repayment (DP Note);
   • Other relevant information.

10. Repayment Procedure: (a) The entire amount of principal taken, along with interest/profit, must be paid to Bangladesh Bank within the stipulated tenure of the funds disbursed in favor of the bank; (b) All responsibilities for recovering loans distributed at the farmer level will remain with the loan-distributing bank. The recovery of loans at the farmer level cannot be linked to the dues of Bangladesh Bank; (c) If the loan balance is not repaid within the stipulated tenure, it will be recovered/adjusted by debiting the current account of the concerned bank kept with Bangladesh Bank; (d) If Bangladesh Bank is satisfied that the funds of loans provided under the scheme or any part thereof were not used properly, or if interest/profit exceeding 4% was recovered against distributed loans, an additional interest/profit at the rate of 2% over and above the determined rate will be levied on that amount and recovered as a lump sum.

Continuing Page-03 Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd

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Bangladesh Bank (Central Bank of Bangladesh) Head Office Motijheel, Dhaka-1000 Bangladesh. -03-

11. Reporting and Monitoring: (a) Separate accounts must be maintained for each loan distributed under this scheme. (b) After receiving financing from Bangladesh Bank, a consolidated statement of loan distribution (according to Annexure Table-2) must be submitted to the Agriculture Credit Department of Bangladesh Bank on a monthly basis (within 07 working days after the end of the month) for intensive monitoring. (c) To ensure proper use of loans at the farmer level, the bank must have its own specific plan and monitoring system, which must be submitted to Bangladesh Bank at the time of executing the participation agreement. Bangladesh Bank will monitor and evaluate the proper use of loans at the farmer level through periodic field visits and verification of information.

12. Promotion and Farmer Selection for Loan Distribution: (a) Banks must install banners in easily visible places outside the bank mentioning information about the program of distributing loans at the farmer level at an interest/profit rate of 4% for wheat and maize cultivation under the refinance scheme. (b) To encourage farmers to take loans under this scheme, special campaigns must be conducted through the concerned branches before the start of the relevant crop cultivation season. (c) To identify genuine farmers, assistance from the local agriculture extension office may be taken if necessary.

13. Fund Management: The overall supervision/operation/management of this fund will be carried out by the Agriculture Credit Department, Head Office, Bangladesh Bank, and for this purpose, the Agriculture Credit Department may issue necessary instructions regarding conditions/rules.

14. Other Conditions: (a) The concerned bank will distribute loans subject to consideration of the fund availability limit from Bangladesh Bank, and in the distribution of loans, the bank will follow existing rules and regulations; (b) Other policies issued and currently followed by Bangladesh Bank, such as the Agriculture and Rural Credit Policy, e.g., collateral, time period for application submission and processing, determination of borrower eligibility, loan distribution, proper use of loans, supervision and recovery process, will be followed as usual; (c) If refinance is received against loans distributed for maize cultivation, application for re-subsidization under the interest/profit compensation facility provided in ACD Circular No. 02 issued on 22/05/2022 against such loans will not be allowed; (d) In the case of the aforementioned refinance, the bank will provide necessary information, documents, and copies of deeds to Bangladesh Bank as required. Bangladesh Bank may make necessary additions, deletions, and modifications to the conditions of the aforementioned refinance policies from time to time.

It is advised that interested banks wishing to participate in this refinance scheme, following the aforementioned policies and conditions, submit their application to this department within 10 (ten) working days after the issuance of this circular, mentioning the potential loan demand for the ongoing fiscal year 2022-23, to execute a Participation Agreement under the scheme.

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

Yours faithfully,

(Signature) (Md. Abul Kalam Azad) Director (ACD) Phone: 9530131

Annexure: 2 (Two) Pages

Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd

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50119

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

Annexure Table-1

Table-1: Refinance Claim Details (Monthly) under the Taka 1,000.00 (One Thousand) Crore Refinance Scheme to Increase the Production of Wheat and Maize

Bank Name: Month Name: Fiscal Year:

(In Crore Taka)

Branch Name	Farmer Name and Mobile Number	Amount of Distributed Loan	Cultivated Crop	Interest/Profit Rate at Farmer Level	Date of Loan Distribution	Tenure of Loan	Amount of Refinance Claimed Against Distributed Loan
Total

(Signature)

Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd

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50119

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

Annexure Table-2

Table-2: Consolidated Statement of Loan Distribution (Monthly) under the Taka 1,000.00 (One Thousand) Crore Refinance Scheme to Increase the Production of Wheat and Maize

Bank Name: Period of Statement: --/--/---- to

(In Crore Taka)

District Name	Upazila Name	Branch Name	Amount of Allocation	Approved Loan Amount	Amount of Distributed Loan	Percentage of Distribution vs Allocation	Number of Sharecroppers Receiving Loan	Total Number of Farmers Receiving Loan
					Wheat	Maize	Total
Total

(Signature)

Phone: 88-02-9550448, 9554896, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd