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Bangladesh Bank has launched a Tk 30 billion refinancing fund to boost the agriculture-based economy in northern Bangladesh, with a focus on expanding agricultural production, storage, processing, marketing and exports.
The central bank announced the initiative in a circular issued on Monday (July 6).
According to Bangladesh Bank, the fund aims to strengthen food security, create jobs and reduce poverty by unlocking the economic potential of the country’s northern agricultural region. Although Rajshahi Division and Rangpur Division are among the country’s leading agricultural producers, inadequate cold storage, logistics, processing facilities and marketing infrastructure have limited their growth.
The refinancing scheme, which will remain in force for three years, will be managed by Bangladesh Bank and will be open to all scheduled banks. Participating banks must sign an agreement with the central bank.
The fund will be allocated across four priority areas: 15 percent for agricultural production, 35 percent for storage, transport, marketing and infrastructure development, 35 percent for agro-based industries and food processing, and 15 percent for agricultural exports.
The financing can be used to establish cold storage facilities, silos, warehouses, cold-chain logistics, agro-processing industries, food processing plants and efficient supply chain infrastructure.
Under the scheme, borrowers in the agricultural production sector will be eligible for loans of up to Tk 3 million. Loans of up to Tk 400 million will be available for storage, infrastructure, agro-based industries and food processing projects, while agricultural exporters can receive up to Tk 150 million. Banks may adjust loan amounts by up to 20 percent based on a borrower’s actual financing needs.
Participating banks will receive refinancing from Bangladesh Bank at an interest rate of 4 percent. They must lend to customers at a maximum interest or profit rate of 9 percent. For Islamic banking, Shariah-compliant profit rates will apply but cannot exceed 9 percent.
The central bank also said the facility is intended only for fresh lending. The funds cannot be used to refinance, reschedule or adjust existing loans, and banks are prohibited from charging borrowers any fees beyond the prescribed charges.
Bangladesh Bank said the primary objective of the fund is to increase investment in agriculture and agro-based industries, create jobs, add value to agricultural products, expand export capacity and contribute to the country’s overall economic growth.