ACD Circular No. 06: Disbursing agricultural credit for salt cultivation at 4% concessional interest rate

50119

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

Agricultural Credit Department 3 Ashwin, 1429 Date: 18 September, 2022

ACD Circular No.- 06

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

Dear Sir,

Regarding the distribution of loans at a 4% concessional interest rate for salt cultivation for the benefit of cultivators.

Reference is drawn to your attention to the instruction titled 'Provision of loans to salt cultivators at concessional interest rates' mentioned in clause 6.19.2 of the Agricultural and Rural Credit Policy and Program for the fiscal year 2022-2023, issued through ACD Circular No.-04 dated 28/07/2022 of this department. In this regard, instructions and regulations regarding the provision of loans to small, marginal, and sharecroppers for salt cultivation in the coastal areas of Bangladesh at a concessional (4%) interest rate to actual salt cultivators were issued through ACD Circular No.-15 dated 08/09/2010 and ACD Letter No.-01 dated 25/01/2011. Now, with the repeal of the instructions and regulations mentioned in the aforementioned ACD Circular No.-15/2010 and ACD Letter No.-01/2011, the following instructions are issued:

a) The above-mentioned concessional interest rate facility will be applicable for salt cultivation in areas suitable for salt cultivation in coastal areas based on the ACD approach, during the salt cultivation season (generally from November to May of the following year).

b) Loans for salt cultivation for the benefit of actual salt cultivators will be distributed in accordance with the loan regulations (Appendix-'A') on an individual/group basis.

c) The above loan facility will be provided to those who own the land for salt cultivation against the hypothecation of documents submitted in favor of their ownership and the produced salt as primary collateral. In the case of sharecroppers, a certificate from the owner of the relevant land/local respected person will be required. For the identification of salt cultivators who have opened accounts by depositing 10 Taka, no other documents will be required except the said account/agricultural input assistance card.

d) If any loan remains fully/partially unpaid after the expiry of the prescribed period of the distributed loan, the concessional interest rate will not be applicable on it. In that case, the normal interest rate determined by the bank from the date of loan distribution will be applicable.

e) After recovering/coordinating the loans distributed at concessional interest rates, banks will submit an application to Bangladesh Bank for interest compensation at a 4% rate against the loan accounts within one month of the end of the relevant fiscal year. Bangladesh Bank will determine the amount of interest compensation received after verifying at least 10% of the submitted claims through field verification and will pay the interest compensation amount to the banks from its own account, arranging for its reimbursement from the Ministry of Finance. If any interest is charged in excess of the 4% interest rate on any loan account, that loan account will not be considered for interest compensation.

f) In addition, other instructions mentioned in the Agricultural and Rural Credit Policy issued from time to time by this department will also be applicable in the case of loan distribution for salt cultivation.

The above instructions will come into effect immediately.

These instructions are issued under the powers conferred by Section 45 of the Bank Company Act, 1991.

Yours faithfully,

(Signature) (Md. Abul Kalam Azad) Director (ACD) Phone: 9530138

Enclosure: 1 (One).

Phone: 88-02-9550848, 9554899, IP: 88-02-55665001-6, Fax: 88-02-9530479, www.bb.org.bd

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Appendix-A

Loan Regulations for Salt Cultivation in Coastal Areas

(Cost per acre)

Expense Head	Purchase of Polythene	Water Lifting Cost (including machine rent, oil cost, and labor)*	Labor	Land Rent (Maximum)**	Embankment Construction and Other Costs	Total (Maximum)
Amount in Taka	17,000	10,000	66,500	50,000	10,000	1,53,500

Loan Distribution and Repayment Schedule

Loan Distribution Period	Repayment Schedule
From November month	Until May month of the following year

• The relevant branch of the lending bank will decide on whether to consider water lifting costs at the time of loan approval by ensuring its necessity at the field level.

** Land rent will not be applicable in the case of salt cultivation on self-owned land.

(Signature)