Circular Letter No. 02: Formulation of Bangladesh Bank Agricultural Development Common Fund (BBADCF)

Bangladesh Bank (An Autonomous Central Bank of Bangladesh) Main Headquarters Gazipur, Dhaka-1000 Bangladesh.

Circular Letter No. 02: Guidelines for Formulation of Bangladesh Bank Agricultural Development Common Fund (BBADCF)

Dated,

The Bangladesh Bank Monetary Policy Committee has decided to formulate the 'Bangladesh Bank Agricultural Development Common Fund (BBADCF)'.

The Bangladesh Bank Monetary Policy Committee, in its meeting held on 19th June 2022, has approved the following guidelines for the formulation of BBADCF:

1. Guidelines and Long-Term Financial Year Credit Disbursement:

K. Commercial banks shall allocate 30% (thirty percent) of their short-term and long-term agricultural credit disbursements for the current financial year to the BBADCF, in addition to the existing allocation of 30% (thirty percent) of their short-term and long-term agricultural credit disbursements to the existing Agricultural Credit Fund. Furthermore, commercial banks shall allocate 30% (thirty percent) of their short-term and long-term agricultural credit disbursements to the BBADCF, in addition to the existing allocation of 30% (thirty percent) of their short-term and long-term agricultural credit disbursements to the existing Agricultural Credit Fund, if they wish to avail themselves of the refinance facilities under the existing Agricultural Credit Fund/Refinance Scheme.

L. Commercial banks shall submit the details of the BBADCF allocation to the Bangladesh Bank along with their quarterly disbursement reports within 30 days of the end of each quarter. The interest rate on the BBADCF allocation shall be determined by the Bangladesh Bank. No interest shall be paid on the BBADCF allocation, nor shall any interest be charged on the BBADCF allocation. In case of non-payment of interest on the BBADCF allocation, the Bangladesh Bank may take punitive action against the commercial bank under the 'Bangladesh Bank (Offences and Penalties) Rules, 1991'. No additional penalty shall be imposed on commercial banks for non-payment of interest on the BBADCF allocation within 30 days of the end of the quarter.

M. The Bangladesh Bank shall conduct a review of the BBADCF allocation by commercial banks every 18 months, and the review shall be completed within 7 days of the end of the review period.

N. Commercial banks may utilize the BBADCF allocation for disbursement of short-term and long-term agricultural credit for the current financial year. In this regard, commercial banks shall submit a quarterly report to the Bangladesh Bank regarding the utilization of the BBADCF allocation, along with the necessary documents, in the format prescribed by the Bangladesh Bank (Annexure A or Annexure B).

O. Commercial banks shall coordinate with the Bangladesh Bank for the allocation of long-term credit. If the allocation of long-term credit is not coordinated, the Bangladesh Bank shall verify the details through its field offices and take necessary action.

P. The Bangladesh Bank shall allocate 10% of the total agricultural credit disbursement by commercial banks to the 'Short-Term and Long-Term Agricultural Credit' fund, based on the disbursement report submitted by the commercial banks. In this regard, the total disbursement by commercial banks shall be 50% of the total agricultural credit disbursement.

Q. The Bangladesh Bank shall review the Statutory Liquidity Ratio (SLR) of commercial banks in relation to the BBADCF allocation.

R. The Bangladesh Bank shall not deduct the agricultural credit disbursement by commercial banks from the total credit disbursement.

S. If any new interest rate is introduced by the Bangladesh Bank for the BBADCF allocation, the same shall be implemented by commercial banks from the effective date of the policy rate.

T. Commercial banks shall contribute 1% of the total agricultural credit disbursement to the 'Risk Mitigation Fund' of the Bangladesh Bank.

U. Commercial banks shall disclose the contribution of 1% of the total agricultural credit disbursement to the Common Equity Tier-1 (CET-1) capital as 'General Reserve' in their quarterly financial statements.

V. The Bangladesh Bank shall not impose any penalty on commercial banks for non-compliance with the BBADCF guidelines. However, if any commercial bank fails to comply with the BBADCF guidelines or any other directive issued by the Bangladesh Bank, the Bangladesh Bank may take punitive action against the commercial bank.

W. Commercial banks shall submit the details of the BBADCF allocation to the Bangladesh Bank within 02 (two) months of the end of the financial year.

2. These guidelines shall be effective from the date of issuance of this circular and shall remain in force until further notice.

3. In case of any conflict between these guidelines and any existing directive, these guidelines shall prevail.

4. This directive has been issued under Section 45 of the Bangladesh Bank Order, 1972.

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Approved by, (Deputy Governor) Executive Director (Monetary-1)

Address: 0255665001-6/20170 Email: debashish.sarker@bb.org.bd]