Tk10,000cr agri-refinancing scheme, BB revises its policy

The Bangladesh Bank has formally launched a Tk10,000 crore special refinancing scheme to boost agricultural production and ensure food security, while revising key provisions from its initial proposal. 

The new directive replaces the plan to use foreign currency reserves with domestic bank surplus liquidity and reduces the scheme's duration from five years to three.

Through an Agriculture Credit Department circular, issued yesterday (28 June) and sent to the managing directors/chief executive officers of all banks, the central bank provided a comprehensive set of revised operating guidelines for the scheme. This follow-up circular replaces critical parameters previously outlined on 8 June.

A fundamental shift in policy has occurred regarding the source of funding. According to the circular, the Tk10,000 crore scheme is no longer dependent on using foreign currency reserves. Instead, it will be constituted from the surplus liquidity of scheduled banks operating under the central bank's management. This change ensures the programme operates strictly with domestic funds, preserving external reserves.

The duration of the scheme has also been adjusted. The central bank specified that the new refinancing tenor is now fixed at three years from the date of the new circular issuance, down from the original five-year proposal.

All other instructions and provisions of the 8 June circular that were not specifically amended remain unchanged. Bangladesh Bank stated that these new guidelines are effective immediately.

This revised approach by the central bank appears intended to streamline the refinancing process by leveraging domestic banking liquidity while supporting the crucial agriculture sector, responsible for rural employment and national food security.