Dhaka: Bangladesh Bank (BB) 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.
According to Bangladesh Sangbad Sangstha, the central bank today issued a circular instructing all banks to maintain a provision at the rate of 1 percent against all unclassified standard and Special Mention Account (SMA) Short Term Agricultural Credits and Cottage, Micro and Small (CMS) enterprise credits under the CMSME sector until 31 December 2026.
This new directive marks a change from earlier requirements where banks were obligated to maintain provisions at the rate of 1 percent for standard loans and 5 percent for SMA loans. The central bank's move is intended to ease the financial burden on banks, thereby encouraging them to support and extend more credit to these critical sectors.
All other instructions from earlier circulars and their subsequent modifications will remain unchanged, ensuring that the new directive specifically targets lending practices within the agricultural and CMSME sectors.