Bangladesh Bank (BB) has decided to form a Bangladesh Bank Agricultural Development Common Fund (BBADCF) to utilize the undisbursed portion of agriculture and rural loans for an acceleration of farm production.k The Agriculture Credit Department (ACD) of BB issued a circular in this regard and sent it to the top executives of banks on Monday with immediate effect. The circular stated that banks would deposit money equivalent to the undisbursed amount of farm and rural loans in the BBADCF, and BB would use the fund giving 2 percent interest on the deposits. Then the money of the BBADCF would be distributed among banks considering the capacity of the depositors’ bank. The banks would pay back the loans to the BB, along with 2 percent interest rate, within 18 months of the fund being released. Read more: BB disburses Tk 4000 crore as liquidity support to 5 Islami banks The scheduled banks can disburse loans of BBADCF money among the farmers using respective banks’ networks and can charge an 8 percent interest rate to the farmers’ level. But the banks cannot disburse the loan to microfinance institutions (MFIs), the notification said. The lender banks have to form a ‘Risk Mitigation Fund’ with 1.0 percent of disbursed loans from BBADC funds. Banks would be allowed to transfer 4 percentage points of the interest to their income segment on the loans made from the fund. The BB announced a new agricultural credit policy with a target of Tk 30,911 crore for the current financial year. The target is 8.88 percent higher than the previous year’s target Tk 28,391 crore. Considering the increased demand for agricultural and rural credit, the disbursement target for the state-owned and specialized commercial banks is fixed at Tk11,758 crore and for the private and foreign commercial banks is fixed at Tk19,153 crore. Read more: Monetary policy twice a year: BB The ACD of BB announced the 'Agricultural and Rural Credit Policy’ in July, giving importance to increasing agriculture production considering the Covid-19 pandemic and recent global situation. In the previous FY-22, all the scheduled banks disbursed agricultural and rural credit of Tk 28,834.21 crore against the target of Tk 28,391 crore, which is approximately 101.56 percent of the affixed target. The agricultural and rural credits were disbursed among 33, 04,811 persons in a total of which 17, 97,052 women borrowers have received Tk10,829.39 crore. Besides, 24, 99,945 small and marginal farmers have received around Tk20,182.30 crore from different banks. Moreover, Tk 19.59 crore was disbursed among 4,073 farmers of char, haor, and less developed areas of the country in the last fiscal year.