Repatriates from Covid-affected village in Bangladesh will get unsecured loans

A file photo shows people leaving the capital with their belongings in a truck due to loss of income amid the Covid epidemic in the country. The Bangladesh Bank on Monday launched a low-interest Tk 500 crore refinancing program for people who have returned to their villages due to the economic shock induced by Covid. – Photo New Age

The Bangladesh Bank on Monday launched a low-interest Tk 500 crore refinancing program for people who have returned to their villages due to the economic shock induced by Covid.

Under this program, people who returned to their villages after the coronavirus outbreak would receive unsecured loans from banks for agricultural and small-scale income-generating activities.

The central bank has set the limit on the interest rate on these loans at 6 percent on the client side.

Banks would receive these funds from the central bank at an interest rate of 0.5 percent.

The BB issued a circular in this regard on Monday, claiming that the Covid epidemic had forced a significant number of city dwellers to return to the villages.

Many people still live an inhuman life in the villages and it is essential to bring these people under the stimulus packages announced by the prime minister, otherwise it could have a negative impact on the rural economy of the country, the circular said. BB.

The rural economy would become vibrant if suitable jobs for these people could be provided in the villages, he said.

The central bank has put in place the refinancing plan to meet the target, Circular BB said.

The central bank has also specified a wide range of income-generating initiatives as eligible to obtain loans under the refinancing program.

Initiatives include small-capitalization enterprises, small and medium-scale vehicle procurement, light engineering industry, fishing and animal husbandry, information and telecommunication service centers and income-generating initiatives, building and renovating houses, growing vegetables and fruits, farm equipment, buying and selling crops, among others.

The loan limit for individuals has been set at 5 lakh Tk. A person would be eligible to take out a loan more than once when paying off the previous loan.

For loans up to Tk 2 lakh, borrowers would get the highest 24 months including a 3 month grace period for repayment.

For loans up to Tk 5 lakh, borrowers would get up to 36 months including a 6 month grace period for repayment.

The regime’s three-year term will expire in 2024, but loan recovery would continue even after the term expires.

Public commercial and specialized banks as well as other banks interested in participating in the refinancing plan would implement the refinancing plan.

Banks, however, would not be allowed to disseminate loans through microcredit entities.

Banks will have to repay the refinancing money and interest to the central bank within one month of receiving repayment from borrowers.

Banks, however, are allowed to use the money as a revolving fund until its term expires in December 2024.

If a bank charges more than 6 percent interest on issuing a particular loan amount from the refinancing program, the central bank will recover an additional 1 percent of the amount as a fine.


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