Tk3,000 Crore Fund Unveiled to Transform Northern Bangladesh Into Agribusiness Hub

Bangladesh Bank has formed a Tk 30 billion refinancing fund to develop an agriculture-based special economic hub in the northern region. The fund will finance agricultural production, storage, transportation, marketing, processing and export activities in 16 districts of Rajshahi and Rangpur divisions. The initiative aims to boost the agricultural economy by providing loans to farmers and agriculture-based entrepreneurs on easier terms and increasing value addition to farm products.

According to a Bangladesh Bank press release, the fund will support an integrated agricultural value chain covering production, storage, processing, transportation, marketing and export to international markets. The maximum interest or profit rate for customers has been set at 7%. Under the revised guidelines, participating banks will receive refinancing from Bangladesh Bank at an interest or profit rate of 3%. Both conventional and Shariah-based financing must be provided to customers at a maximum rate of 7%.

Why the Initiative Was Taken
North Bengal is one of the country’s major agricultural production regions. However, inadequate facilities for storing, processing and marketing farm products cause significant losses every year and often force farmers to sell their produce at low prices.
Bangladesh Bank said the region’s agricultural potential cannot be fully utilised because of inadequate cold storage, modern warehouses, processing industries, transportation and marketing facilities. The new financing programme therefore aims not only to increase production but also to expand storage, value addition, processing and export opportunities.

Fund Divided into Four Sectors
The Tk 30 billion fund will be allocated across four major sectors. Fifteen percent will go to agricultural production, while 35% will finance agricultural product storage, transportation, marketing and infrastructure development. Another 35% will be allocated to the production and processing of agricultural and agriculture-based products, while 15% will support the export of agricultural and agriculture-based products. Thus, 70% of the fund will be directed towards storage, marketing, infrastructure, production and processing, creating opportunities to turn agricultural products into commercially profitable goods.

Loan Limits for Farmers and Entrepreneurs
Under the fund, an individual customer can receive up to Tk 3 million for agricultural production.
For agricultural product storage, transportation, marketing and infrastructure, financing of up to Tk 400 million will be available. The same maximum amount will apply to the production and processing of agricultural and agriculture-based products. For agricultural and agriculture-based product exports, financing of up to Tk 150 million will be available. The facility will enable small farmers and entrepreneurs to obtain financing to increase production, while larger entrepreneurs can invest in cold storage, warehouses, transportation, processing plants and export-oriented industries.

Operations Limited to 16 Districts
The refinancing programme will cover 16 districts under Rajshahi and Rangpur divisions. The fund will remain in operation for three years from the date of issuance of the circular.
Bangladesh Bank expects the initiative to increase value addition to agricultural products, promote agriculture-based industries and create employment and income opportunities in rural areas. It also expects the export capacity of agricultural products to increase.

Focus on Cold Chain and Processing
Although the northern region produces large quantities of agricultural products, it lacks adequate post-production infrastructure. As a result, many farmers are forced to sell their produce quickly. When supply rises in the market, prices fall, depriving farmers of fair returns.
The new fund will finance modern and environmentally friendly cold storage facilities, seed storage facilities, warehouses, food grain storage facilities or silos, cold-chain logistics and agriculture-based industries. Financing will also be provided for agricultural product processing industries. This could allow products such as potatoes, mangoes, vegetables and grains to be processed before reaching the market, creating greater value addition than direct sales.

Scope for Increasing Exports
Fifteen percent of the fund has been earmarked for export-oriented agricultural and agriculture-based products. Entrepreneurs involved in producing, processing and exporting products with international market demand will therefore have access to easier financing. Bangladesh Bank expects that an effective supply chain from production to export will improve the competitiveness of northern Bangladesh’s agricultural products and help create new international markets.

Agreements Signed with 38 Banks
According to Bangladesh Bank, after the fund-related circular was issued on July 6, participation agreements were signed with 38 interested banks at a programme held on August 31 at the Jahangir Alam Conference Hall of Bangladesh Bank.
Bangladesh Bank Deputy Governor Dr Md Kabir Ahmad attended the programme as the chief guest.
The original policy issued on July 6 established the financing framework for agricultural production, agricultural product storage and marketing infrastructure, agriculture-based industries and export-oriented activities.

Lower-Cost Financing for Entrepreneurs
The revised policy sets the maximum customer interest or profit rate at 7%, creating an opportunity for farmers and entrepreneurs in the northern region to access bank financing at a lower cost. Participating banks will also receive refinancing from Bangladesh Bank at 3%. If implemented effectively, the initiative could strengthen the connection between agriculture, industry, transportation, storage, processing and exports in North Bengal. It could reduce agricultural waste, increase farmers’ income, create rural employment and encourage the development of agriculture-based entrepreneurs.
Overall, Bangladesh Bank views the Tk 30 billion refinancing fund not merely as a programme for distributing agricultural loans, but as a major initiative to transform North Bengal’s agriculture from production-based activity into a value-added, industrialised and export-oriented economic sector.