Bangladesh Bank (BB) on Sunday directed the commercial banks to provide collateral-free loans for marginal farmers and lower-income groups under a special scheme.

“To revive the productive activities in rural economy, the commercial banks will have to issue flexible loans to landless farmers, lower-income groups and small businesses,” a BB circular says.

“School banking account holders will also avail themselves of the credit,” reads the circular signed by SM Mohsin Hossain, general manager at SME and Special Programme department.
Account holders of Tk 10, Tk 50 and Tk 100 are considered as a lower-income group, according to the directive.

The banks will ensure the credit guarantee from own fund instead of taking security deposit from the respective customers.

For participating in the scheme, the banks have to conduct partnership with the Credit Guarantee Scheme (CGS) unit of SME department of Bangladesh Bank.

Bangladesh Bank announced Tk 5 billion scheme in first the week of September last year to support the micro professionals in rural economy.

Under the scheme, the eligible applicants from lower-income groups can avail themselves of maximum Tk 5 lakh taka loan in maximum 7 percent interest.

The banks can follow internal regulations. The repayment tenure of the loans would be three years, including six months of grace period.
From the refinance scheme, the central bank would give fund to the participating banks at the rate of 1 per cent interest.

Small and micro entrepreneurs and occupational people in villages, vicinities and neighborhoods would be considered eligible for the loans.

Marginal and landless farmers, small businesses, occupational people, the people in Char and Haor areas who have suffered natural or manmade catastrophe would be considered for loans from the refinance fund on a priority basis.

Income generating initiatives of people and women of special needs will also be considered eligible for loans from the scheme.