Bangladesh Bank has issued a directive significantly reducing the required loan provisioning rates for banks handling specific credit lines in the agricultural and CMSME sectors, aiming to encourage greater participation by banks in disbursing these credits.
To this end, the central bank today issued a circular, instructing all banks to maintain provision at the rate of 1 per cent against all unclassified standard and Special Mention Account (SMA) Short Term Agricultural Credits and Cottage, Micro and Small (CMS) enterprise credits under CMSME sector till 31 December 2026.
All other instructions of earlier circular and its subsequent modifications will remain unchanged.
Earlier, banks are required to maintain provisions at the rate of 1 percent and 5 percent of outstanding loans against standard and SMA respectively.
Earlier, Bangladesh Bank extended a loan rescheduling facility for raw jute exporters till December 31, 2025, allowing them to reschedule loans for the next two years with a two percent down payment based on their outstanding loans as of December 31, 2024.
To this end, the central bank on Monday issued a circular saying that the instruction has been given in response to difficulties faced by exporters in fulfilling the requirements of earlier measures designed to resolve the existing problems within the raw jute export sector.
The new directive is effective immediately and was issued under the authority provided by Section 45 of the Bank Company Act, 1991.
It should be noted that the central bank had previously issued a circular on March 31, 2024, which required raw jute exporters to submit their applications for loan rescheduling within six months from that initial circular鈥檚 issuance date.
