BRPD Circular No. 08: Re-fixation of Rate of Interest on Agricultural and Rural Credit

Department of Banking Regulations and Policies Bangladesh Bank Head Office Dhaka.

22 April 2021
BRPD Circular No.- 08 Date: -----------------
09 Bangabda 1428
Managing Director/Chief Executive Officer
All Scheduled Banks operating in Bangladesh.

Dear Sir,

Regarding the re-fixation of the interest rate on agricultural and rural credit.

Reference is drawn to your attention to BRPD Circular No.-09 issued on 22 June 2017 on the subject cited above.

2. Through the said circular, the maximum interest rate on agricultural and rural credit as a priority sector was reduced from 10% to 9%. Subsequently, through BRPD Circular No.-03/2020, effective from 1 April 2020, the maximum interest/profit rate on non-performing loans/investments in all sectors other than credit cards was fixed at 9%.

3. Agriculture is an important sector of Bangladesh's economy. The development of agriculture is directly linked to the food security of Bangladesh's large population and economic development. Therefore, the Government of Bangladesh is prioritizing agricultural development with the aim of ensuring food security and nutrition, poverty alleviation, and job creation. Since 2020, similar to other countries in the world, the outbreak of COVID-19 has been seen in Bangladesh, disrupting the country's normal economic activities. As a result, the agricultural sector has also been affected, like other sectors. In this context, it is necessary to reduce the interest/profit rate on loans/investments in the agricultural sector to ensure the supply of low-interest loans in the agricultural sector, bring farmers back to normal productive activities, and increase agricultural production.

4. In light of the contribution of the agricultural sector to the national economy, the maximum interest/profit rate on loans/investments in the agricultural sector as a priority sector has been re-fixed from a maximum of 9% to a maximum of 8% to ensure the supply of low-interest loans in the agricultural sector, bring farmers back to normal productive activities, and increase agricultural production.

This directive shall be deemed effective from 1 April 2021.

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

Yours faithfully,

(Md. Nazrul Islam)
General Manager
Phone: 9530252