B Mirror Report : Banks’ Provision Requirement Will Be Reduced by 50% to Increase Agricultural and SME Loans.
The central bank has given banks a waiver on keeping loan loss provisions in order to boost lending to SMEs and agriculture. Banks will therefore have to maintain less precautions against these loans than they did previously.
Bangladesh Bank issued a circular on this matter on Sunday (21 December). Loan loss provisions are maintained from banks’ operating profits; therefore, this concession is expected to help increase banks’ profitability.
Banks are required to maintain provisions at the rate of 1 percent and 5 percent respectively against outstanding loans classified as Standard and Special Mention Account (SMA). A new decision has been taken to encourage banks to disburse short-term agricultural loans and loans to cottage, micro, small, and medium enterprises (CMSME), particularly cottage, micro, and small industrial enterprises.
According to the new directive, until 31 December 2026, banks will be allowed to maintain provisions at a rate of 0.50 percent instead of 1 percent against all unclassified (Standard and SMA) short-term agricultural loans and loans to cottage, micro, and small (CMS) industrial enterprises under the CMSME sector. This effectively halves the provision requirement.
All previously issued circulars and subsequent amendments on this matter will remain unchanged.

