BB reduced the rate of provisioning for short-term agricultural loan

DHAKA, Nov 18, 2014 - Bangladesh Bank (BB) on Tuesday reduced the rate of provisioning for short-term agricultural loan and microcredit.

A loan provision is an amount set aside in the event that the loan
defaults.

The central bank in a circular said the rate of the provision would be 2.5 percent against a loan of Taka 100, meaning a bank should set aside Taka 2.5 for an unclassified agricultural loan and microcredit of Taka 100. Earlier, the rate of provisioning for the similar loans was fixed at 5.0 percent.

BB said the loan provisioning was reduced to encouraging participation of the banks in disbursing agricultural loan and microcredit.

It, however, said the loan provisioning for classified as 'sub-standard' and 'doubtful' agricultural loans and micro-credits would be 5.0 percent and for the classified as 'bad/loss' would be 100 percent.