Bangladesh Bank has reduced the provisioning rate for loans in the agriculture and cottage, micro, small, and medium enterprise (CMSME) sectors to encourage banks to expand credit to these areas. According to a circular issued on Sunday, banks will now need to maintain only 0.5% provisioning against standard and special mention account (SMA) loans in these sectors until December 31, 2026. This marks a reduction from the previous 1% rate set in October 2025.

The central bank stated that the decision aims to stimulate short-term agricultural lending and support small-scale industries that are vital for rural employment and economic resilience. Financial analysts view the move as a liquidity-friendly measure that could ease credit flow to underserved sectors. However, some caution that lower provisioning may heighten risk exposure if loan recovery remains weak.

The revised policy is expected to help banks allocate more funds to productive sectors, potentially boosting rural output and SME growth in 2026. Bangladesh Bank will monitor compliance and loan performance under the new framework.