The central bank has relaxed its loan provisioning policies to facilitate agricultural and microcredit disbursement, officials said.
Under the relaxations, the commercial banks will have to maintain provisioning for all unclassified short-term agricultural and microcredits at 2.5 per cent instead of 5.0 per cent earlier.
Provisioning for classified as 'sub-standard' and 'doubtful' will remain unchanged at 5.0 per cent, according to a circular issued by the Bangladesh Bank (BB) Tuesday.
Besides, the provisioning for classified as 'bad/loss' will be maintained at 100 per cent, the circular said.
"We've relaxed the loan provisioning policies aiming to expedite disbursement of agricultural loans and micro-credits through encouraging participation of the banks," Chowdhury Md. Feroz Bin Alam, general manger of the Banking Regulation and Policy Department of the central bank, told the FE without elaborating.
The central bank has taken the latest measures against the backdrop of declining trend in agricultural loan disbursement in the first quarter (Q1) of the current fiscal year (FY) 2014-15.
Disbursement of agricultural loan fell by nearly 4.0 per cent to Tk 27.50 billion in the Q1 of the FY '15 from Tk 28.61 billion in the corresponding period of the previous fiscal, the BB data showed.
All scheduled banks have achieved nearly 18 per cent of their annual agricultural loan disbursement target for FY 15, fixed at Tk 155.50 billion.
The central bank has already taken various initiatives to achieve the target by the end of this fiscal year through boosting disbursement of the agricultural loan.
Talking to the FE, a senior official of a leading state-owned commercial bank (SoCB) said such relaxations will help increase disbursement of the agricultural loans in the coming months.
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