Tk 2 lakh collateral free loans for smallholder wheat and maize farmers

Landless, small and marginal farmers and sharecroppers in Bangladesh could receive loans of up to Tk 2 lakh without any collateral under the central bank’s Tk 1,000 crore refinancing scheme aimed at boosting wheat production and corn.

The Bangladesh Bank has today issued the guideline on the implementation of the program which also aims to reduce dependence on imports.

According to the directive, despite higher demand, local production of wheat and maize is not sufficient. As a result, the country has to import a large volume of cereals to ensure a regular supply of products and items made from it.

This means that Bangladesh has to spend a lot of foreign currency.

Under these circumstances, the decision to unveil a Tk 1,000 crore refinancing package has been taken, the BB said. The program will last until June 2025.

Under this program, banks would receive funds at an interest rate of 0.50% from the central bank. The interest rate at the farmer level would be a maximum of 4 percent in terms of simple interest.

Banks should disburse loans directly to borrowers through their networks and prioritize areas suitable for growing wheat and maize.

Landless farmers, who own less than 0.494 acre of land, small and marginal farmers, who own 0.494 to 2.47 acres of land, and sharecroppers could receive loans up to Tk 2 lakh without any collateral .

The loan granted under the program cannot be used to adjust old loans, the BB said.