Written by The Banking Post
Bangladesh Bank (BB) has reduced loan provisioning requirements for banks on certain agricultural and CMSME credit portfolios in a bid to boost financing to these key productive sectors.
In a circular issued today, the central bank instructed all scheduled banks to maintain a uniform 1 percent provision against all unclassified standard and Special Mention Account (SMA) short-term agricultural credits and Cottage, Micro and Small (CMS) enterprise loans under the CMSME sector until December 31, 2026.
The move is aimed at encouraging banks to expand their lending activities in rural and small-enterprise segments, which are seen as critical for employment generation and economic resilience.
Previously, banks were required to keep 1 percent provision for standard loans and 5 percent for SMA loans, creating a higher provisioning burden.
The BB circular also clarified that all other instructions from previous circulars and subsequent amendments will remain unchanged.
Bankers say the relaxation will free up additional funds for lending, while helping banks manage their balance sheets more efficiently amid rising credit demand from the agriculture and CMSME sectors.
