Star Business Report

Bangladesh Bank yesterday cut the interest rate on its flagship Tk 10,000 crore agricultural refinance scheme by 100 basis points to ease farmers’ access to credit, boost rural economic activity and support food security.

Under the revised guidelines, the maximum interest rate at the farmer and customer level has been capped at 7 percent per annum, down from the 8 percent set when the scheme was announced in June this year.

The central bank also reduced its refinance rate for participating commercial banks to 3 percent from 4 percent, according to a circular issued by the BB.

Shariah-based banks operating under Islamic banking principles must also cap their customer-level profit rates at 7 percent. All participating banks must apply interest or profit charges on a reducing-balance basis, where applicable.

The BB, however, kept the maximum repayment period for loans disbursed under the scheme unchanged at 18 months and retained the existing penalty rate for banks.

If the central bank finds that funds have not been properly utilised, it will impose an additional 2 percent penalty interest on the misused amount, to be recovered in a single lump sum.

To raise awareness among marginal farmers, the BB asked banks to display clearly visible promotional banners inside and outside their branches highlighting the availability of agricultural credit at 7 percent interest.

In June 2026, the BB announced the five-year refinance fund from its own resources to provide low-cost loans to farmers. It also advised banks to prioritise farmers with smart cards when extending loans.

The scheme covers crops, fisheries, livestock, agricultural machinery, irrigation equipment and other income-generating farm activities. Small and marginal farmers may receive up to Tk 5 lakh in loans for crop production without collateral, based on crop hypothecation.

In its June circular, the central bank set loan limits at Tk 30 lakh for crop production, Tk 15 lakh for livestock and other agricultural activities, Tk 20 lakh for agricultural machinery, and Tk 1 crore for fisheries and livestock projects.

Published Date: August 31, 2026