Bangladesh Bank has decided to significantly reduce the provisioning requirement for banks against loans disbursed to the agriculture sector and the cottage, micro, small and medium enterprise (CMSME) sector, aiming to increase the flow of credit to agriculture and small entrepreneurs, which are considered the backbone of the country’s economy.
In a directive issued on Sunday, the central bank said that banks will now be required to maintain a provisioning rate of only 0.50 percent against all types of general loans in the short-term agriculture and CMSME sectors. The same rate will apply to both standard or regular loans and Special Mention Account (SMA) loans.
The new decision of Bangladesh Bank will remain effective until 31 December 2026.
This policy change is expected to bring significant relief to commercial banks. Under the previous rules in place before 2024, as outlined in BRPD Circular 15, banks were required to maintain a provisioning rate of 1 percent against general loans and 5 percent against Special Mention Accounts. By lowering the provisioning requirement for specific sectors, it is anticipated that banks will become more willing to expand lending to agriculture and small industries.
Bangladesh Bank has instructed that the directive be implemented immediately, exercising its authority under Section 49(1)(cha) of the Bank Company Act, 1991.
With the issuance of this new circular, the previous directive issued in 2025 under BRPD Circular Letter 22 will stand cancelled. However, all other general rules and loan classification procedures outlined in the 2024 circular will remain unchanged.
