BB cuts interest rate on farm loan

Bangladesh Bank has reduced interest rate on agricultural and rural credit to 10% after considering downward trend in lending interest and deposit rates.

The new interest rate will be effective from July, 2016, according to a circular issued on Tuesday by the central bank.

The present rate is 11% which was set as maximum limit of interest rate on farm and rural loans in December, 2014.

According to the data as of April this year, the rate is higher than the average lending rate of 10.64%.

In December, 2014 Bangladesh Bank had set interest rate on farm loans at 11% from 13% when the average lending rate was nearly 13%.

The country’s banking sector has experienced sharp decline in lending interest rate over the last one year due to lack of credit demand in a persistent sluggish business environment.

In this perspective, the central bank has re-fixed the interest rate on agricultural and rural loans, said a senior executive of Bangladesh Bank.

Bangladesh Bank set a target of disbursing Tk16,400 crore farm loans this fiscal year.

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Source: Dhaka Tribune. Date: June 16,  2016