Bangladesh Bank (BB) has approved the formation of a Tk 1,000 crore refinancing scheme for the agricultural sector to increase domestic production and prevent a food crisis due to the rising prices of food grains in the world market because of the Russia-Ukraine war.

Meanwhile, loan assistance of Tk 1,000 crore will be given through the Karmasangsthan Bank to boost the rural economy and increase fish farming and animal husbandry. Only young men and women will be eligible to get this loan.

The central bank has also approved a pre-financing scheme of Tk 1,000 crore to provide loans through Probashi Kallyan Bank to aspirant migrant workers and rehabilitation of returnee migrants, all to boost manpower export.

The approvals came from the board meeting of BB on Thursday, sources confirmed to TFP.

In another move to ensure food security, sources said, BB has directed the banks that made abnormal profits by selling dollars in May-June this year to use half of the profit in the agricultural sector.

Asked about the new schemes, BB spokesperson GM Abul Kalam Azad told TFP that the central bank is taking steps to ensure food security in harmony with the government’s policy. He did not share the details about the terms and conditions of the schemes.

Md Ali Hossain Prodhania, the former managing director of Bangladesh Krishi Bank, praised the central bank’s initiative to ensure food security.

“Such initiatives need to be continued because there is no alternative to increase our domestic production to tackle any possible food crisis. If the farmers get loans more at low interest without any hassle, it will play a big role in food production,” he said.

BB sources informed that a circular will be issued later regarding the terms and conditions of the refinancing scheme, like the loan interest rate and the maximum amount of loan a customer can apply for.

In September last year, a Tk 3,000 crore refinancing scheme was launched to help the agriculture sector cope with the impacts of the Covid-19 pandemic. The interest rate on loans taken under that scheme was 4 per cent (simple interest). Meanwhile, this September, the central bank launched a Tk 1,000 crore refinancing scheme for wheat and maize farmers, as it sought to reduce import dependence and increase the cultivation of staple grains.

Under that scheme, any farmer can take loans based on the bank-customer relationship and get a loan of a maximum of Tk 2 lakh with a 4 per cent interest rate without any collateral.

The World Bank will help increase the income of 1.7 lakh poor people who are at risk of climate change by increasing agricultural and fish production. For this purpose, the global lender approved $120 million in assistance to Bangladesh in March this year.

On the other hand, a target of Tk 30,911 crore for the disbursement of agricultural loans has been set for the current financial year of 2022-23, which is 8.88 per cent higher than the previous fiscal year.

According to the Department of Agricultural Extension, Bangladesh produced 4.59 crore tonnes of food grains in the last fiscal year. Of this, the amount of rice was about 3.82 crore tonnes, wheat 10.85 lakh tonnes and maize 56.29 lakh tonnes. In FY2021-22, Bangladesh imported about 11.2 lakh tonnes of rice, which is only 3 per cent of the domestic production. Also, 50.63 lakh tonnes of wheat and about 22 lakh tonnes of maize were imported.

Meanwhile, the Tk 1,000-crore loan assistance scheme that will be disbursed through Karmasangsthan Bank will go to the cottage, micro and small enterprises in rural areas for their development.

Only educated or semi-educated unemployed young men and women who have received training or have practical experience will get this loan facility, according to the BB board meeting agenda.

This initiative is also linked to ensuring the country’s food security, said the central bank spokesperson.