All banks must maintain provision at 1%
Bangladesh Bank/File Photo
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Bangladesh Bank/File Photo
The central bank has issued a directive reducing the required loan provisioning rates for banks handling specific credit lines in the agricultural and CMSME (Cottage, Micro, Small, and Medium Enterprises) sectors, aiming to encourage greater participation by banks in disbursing these credits.
The Bangladesh Bank in a circular issued today (13 October) instructed all banks to maintain provision at the rate of 1% against all unclassified standard; and Special Mention Account (SMA); Short Term Agricultural Credits and Cottage; Micro and Small (CMS) enterprise credits under CMSME sector till 31 December 2026.
Earlier, banks were required to maintain provisions at the rate of 1% and 5% of outstanding loans against standard and SMA, respectively.
A senior official of the central bank said to TBS that the central bank issued this circular to encourage lending to the agricultural and CMSME sectors, as banks do not need to maintain more provisions against the loan.
As a result banks are encouraging lending in two important sectors as well.
All other instructions of the earlier circular and its subsequent modifications will remain unchanged.