UCB, BB join hands boosting rural finance

Bangladesh Bank (BB) and United Commercial Bank (UCB) have signed an agreement to expand financing for farmers, rural entrepreneurs and businesses, with the initiative aimed at boosting agricultural production, strengthening food security and creating more employment opportunities in rural areas.

The initiative is also expected to contribute to poverty reduction by improving access to formal financing for agriculture and rural economic activities.

Under the agreement, UCB will provide financing through BB’s TK 10,000 crore refinance schemes.

The loans will support crop and agricultural production, purchase of agricultural machinery, fisheries and livestock, as well as other income-generating activities in rural areas, said a UCB press release on Tuesday.

UCB will distribute the loans through its branches, sub-branches, agent banking outlets and group-based lending channels to bring formal financing closer to farmers and rural entrepreneurs, including those with limited access to traditional banking services.

The loan tenure will be up to 18 months, with a grace period available where applicable. The interest rate at the customer level will be capped at 8 percent. The refinance facility cannot be used to repay or adjust existing loans or investments.

BB Director (Agricultural Credit Department-2) AKM Saiduzzaman attended the agreement signing ceremony, while UCB was represented by Deputy Managing Director Md. Ridwanul Hoque and Head of the SME and Agri Banking Division Mohammad Salim Chowdhury, added the release.

UCB said the refinance facility would help increase the flow of finance into the agriculture and rural economy, while easier access to funding could help farmers invest in production, encourage rural entrepreneurship, create jobs and strengthen livelihoods.

The bank also expects the initiative to benefit marginal farmers and rural entrepreneurs by providing financing on comparatively easier terms and at an affordable interest rate.