ACD Circular No. 07: Refinance Scheme of 5,000 Crore Taka for Agriculture Sector to Ensure Food Security of the Country

50119

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

Agricultural Credit Department

ACD Circular No. 07 Date: 02 Agrahayan, 1429 17 November, 2022

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

Dear Sir,

Regarding the formation and operation of a 5,000 (Five Thousand) Crore Taka refinance scheme for the agriculture sector to ensure food security of the country.

In the recent global context, due to weak supply systems, there is a risk of food crisis in the world due to price increases in various food items. In this context, it is necessary to increase food production by increasing agricultural production to ensure food security of the country. To this end, a decision has been taken to form a refinance scheme of 5,000 (Five Thousand) Crore Taka to maintain the flow of low-interest loans in the agriculture sector. The following policies will be followed in the operation of the said refinance scheme:

1. Name of the Scheme: Refinance Scheme for Agriculture Sector to Ensure Food Security.
2. Amount of Fund under the Scheme: 5,000 (Five Thousand) Crore Taka (the amount of fund will be increased if necessary).
3. Source: Own funds of Bangladesh Bank.
4. Tenure of the Scheme: Until 30 June, 2024 (the tenure of the scheme will be extended if necessary).
5. Execution of Loan Agreement and Allocation of Funds: a) Banks eligible under the Agriculture and Rural Credit Policy may avail themselves of the refinance facility under this scheme by executing a Participation Agreement with the Agricultural Credit Department, Head Office, Dhaka, Bangladesh Bank. b) Funds will be allocated to banks by the Agricultural Credit Department based on the requirements of the participating banks, the target for distribution of agricultural and rural loans, the capacity for loan distribution, etc. Bangladesh Bank may subsequently re-determine the amount of allocated funds if necessary. c) After distribution of loans at the farmer/customer level, the submitted refinance claims will be reviewed and funds equivalent to the allocated amount will be refunded sequentially.

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Phone: 88-02-9550448, 9554896, IP: 88-02-55685001-6, Fax: 88-02-9530479, www.bb.org.bd

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c) Loans up to 2.00 Lakh Taka can be distributed exclusively without collateral (only against crop lien) for the cultivation of crops and produce (rice, vegetables, fruits, and flowers) in favor of small, marginal, and sharecropping farmers. d) Loans can be distributed in the crop and produce (rice, vegetables, fruits, and flowers cultivation) sector only against the relevant crop lien for cultivation in land up to a maximum of 5 acres, in accordance with the Agriculture and Rural Credit Policy. Furthermore, for loans in sectors other than crops and produce (rice, vegetables, fruits, and flowers cultivation), banks may decide on the requirement of minimum collateral/auxiliary collateral based on the bank-customer relationship. e) Loans taken under this scheme shall not be used in any way for the consolidation of the customer's old loans. f) Any farmer/customer who has defaulted on a loan in any bank/financial institution shall not be considered eligible to receive loans under this scheme. g) Loans shall be distributed by banks in favor of farmers in accordance with the loan regulations mentioned in the Agriculture and Rural Credit Policy.

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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 8% (simple rate). The said interest/profit rate will be applicable equally to all customers.

8. Sectors of Loans: a) Loans can be distributed under this scheme for rice cultivation, fisheries, cultivation of vegetables, fruits, and flowers mentioned in the Agriculture and Rural Credit Policy and program, and the poultry and dairy production sectors under the livestock sector.

9. Tenure of Loans: a) 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 18 months from the date of receiving the refinance. b) In the case of loans distributed at the farmer/customer level, the maximum tenure will be a maximum of 18 months, including a minimum 3-month grace period.

10. Refinance Application Procedure: a) After starting the distribution of loans at the farmer level, participating banks must apply monthly for the receipt of refinance funds. b) The relevant bank, after distributing loans at the farmer level, will apply for refinance to the Director (ACD), Agricultural Credit Department, Bangladesh Bank, Head Office, along with the following necessary information/documents to receive refinance from Bangladesh Bank: ⇒ Certificate of actual distribution; ⇒ Integrated statement of distributed loans (according to Annexure-1); ⇒ Letter of commitment for loan repayment (DP Note); ⇒ Relevant other information.

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11. Repayment Method: a) The entire amount of the principal received, along with interest/profit, must be paid to Bangladesh Bank within the specified tenure of the funds disbursed in favor of the bank. b) All liabilities for the recovery of loans distributed at the farmer level will remain with the loan-distributing bank. In this regard, the claim of Bangladesh Bank cannot be linked with loan recovery. c) If the loan balance is not repaid within the specified tenure, the current account of the relevant bank kept with Bangladesh Bank will be adjusted to recover/adjust the amount. d) If Bangladesh Bank is satisfied that the funds provided under the scheme or any part thereof were not used properly, and if more than 4% interest/profit was recovered against the distributed loans, Bangladesh Bank will levy an additional interest/profit at a rate of 2% over the determined rate on that amount and recover it in a lump sum.

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

13. Promotion and Farmer Selection for Loan Distribution: a) Banks must install banners in easily visible places outside the bank mentioning information regarding the loan distribution program at the farmer level at an 8% interest/profit rate under the refinance scheme. b) To encourage farmers to take loans under this scheme, special campaigns must be conducted through the relevant branches before the start of the season for cultivating the relevant crops. c) To identify genuine farmers, assistance from the local agriculture extension office may be taken if necessary.

14. Fund Management: The activities related to the overall supervision/operation/management of this fund will be carried out by the Agricultural Credit Department, Head Office, Bangladesh Bank, and for this purpose, the Agricultural Credit Department may issue instructions to follow necessary conditions/rules.

15. Other Conditions: a) Relevant banks will distribute loans considering the availability limit of funds from Bangladesh Bank, and banks will follow existing rules and regulations in the distribution of loans. b) The Agriculture and Rural Credit Policy issued by Bangladesh Bank and currently followed, along with other policies such as collateral, time period for receiving and processing applications, determination of borrower eligibility, loan distribution, proper use of loans, supervision, and recovery process, will be followed as appropriate.

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c) In the case of the aforementioned refinance, banks will provide necessary information, documents, and copies of documents 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 this department within 1 (one) month after the issuance of this circular to participate in this refinance scheme by following the aforementioned policies and conditions.

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

Yours faithfully,

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

Appendix: 2 (Two) Pages.

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Annexure-1

Annexure-1: Integrated Statement of Refinance Claims under the Refinance Scheme Formed for the Agriculture Sector to Ensure Food Security of 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	Interest Rate at Farmer/Customer Level	Date of Loan Distribution	Tenure of Loan	Sector of Loan Distribution	Amount of Refinance Claimed Against Distributed Loan
Total Amount

(Signature)

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Annexure-2

Annexure-2: Capitalized Statement of Loan Distribution under the Refinance Scheme Formed for the Agriculture Sector to Ensure Food Security of the Country (Monthly Basis)

Name of the Bank: Period of Statement: Until --/--/----

(In Lakh Taka)

Name of District	Name of Upazila	Name of Branch	Amount of Allocation	Amount of Approved Loan	Amount of Distributed Loan					Rate of Loan Distribution compared to Allocation (%)	Number of Sharecroppers Receiving Loan	Total Number of Farmers/Customers Receiving Loan
					Rice	Fisheries	Poultry	Dairy Production	Vegetables	Fruits and Flowers	Total
Grand Total

(Signature)