Tk 2 lakh collateral-free loans for small wheat, maize farmers

Landless, small and marginal farmers as well as share-croppers in Bangladesh could be given loans up to Tk 2 lakh without any collateral under the central bank's Tk 1,000 crore refinance scheme aimed at boosting wheat and maize production.

The Bangladesh Bank today published the guideline on implementing the scheme that also looks to cut the reliance on imports.

According to the guideline, despite higher demand, the local production of wheat and maize is not adequate. As a result, the country has to import a significant volume of cereals to ensure a smooth supply of the products and the items produced from them.

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This means Bangladesh has to spend a huge amount on foreign currencies.

Under the circumstances, a decision to unveil a Tk 1,000 crore refinance scheme has been taken, said the BB. The scheme will run until June 2025.

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Under the scheme, banks would receive funds at a 0.50 per cent interest rate from the central bank. The interest rate at the farmer's level would be a maximum of 4 per cent in simple interest terms.

Banks would have to disburse the loans directly among the borrowers through their networks and give priority to the areas suitable for wheat and maize cultivation.

Landless farmers, who own less than 0.494 acres of land, small and marginal farmers, who own 0.494 to 2.47 acres of land, and share-croppers could be given loans up to Tk 2 lakh without any collateral.

The loan given under the scheme can't be used to adjust old loans, said the BB.