Bangladesh Bank has sharply reduced provisioning requirements for short-term agricultural loans and financing to cottage, micro, small and medium enterprises (CMSMEs) in a bid to increase credit flow to key sectors of the economy.
In a directive issued on Tuesday, the central bank said it had set a uniform provisioning rate of 0.50% for all unclassified loans in the short-term agriculture and CMSME segments, covering both standard loans and Special Mention Accounts (SMAs). The revised norms will remain in force until 31 December 2026.
The move significantly eases regulatory requirements for commercial banks. Under existing rules set out in BRPD Circular No. 15 of 2024, banks are required to maintain provisions of 1% for standard loans and 5% for SMAs. By halving the buffer for standard loans and sharply reducing it for SMAs in selected sectors, the central bank aims to encourage lenders to step up financing to farmers and small business owners.
Bangladesh Bank said the instruction had been issued under Section 49(1)(Cha) of the Bank Company Act, 1991, and would take immediate effect.
The central bank added that all other guidelines on loan classification and provisioning under the 2024 circular would remain unchanged. The latest directive supersedes earlier instructions issued through BRPD Circular Letter No. 22 of 2025.
