The signing of the Memorandum of Understanding (MoU) for the provision of interest-free loans to agribusiness entrepreneurs and farmers under the first phase of the Agriculture Modernisation Programme took place Monday (22) at the Presidential Secretariat.

The MoUs were signed between the Bank of Ceylon, the Regional Development Bank who are the key contributors to the initial phase and Secretary to the Ministry of Agriculture and Plantation Industry Janaka Dharmakeerthi. Accordingly, MoU with the People’s Bank are expected to be signed in the near future.

In this first phase, Rs. 650 million have been allocated to implement projects through agricultural modernization centres in 26 Divisional Secretariat Divisions selected for pilot projects, with a total of 75 DS divisions identified.

In the implementation of agricultural modernization projects within the DS divisions, more than 30% of the project costs are covered by agribusiness entrepreneurs and farmers, with the remaining 70% funded by the Government.

To facilitate a revolving credit scheme, the government’s contribution, provided as an interest-free loan under the Agricultural Modernisation Credit Scheme, can be recovered by a bank selected by the beneficiary from among the Bank of Ceylon (BoC), People’s Bank, and Regional Development Bank (RDB). A cabinet memorandum presented by President Ranil Wickremesinghe to establish and implement this system has been approved.

As a result, for selected and approved projects, interest-free loans will be paid to agribusiness entrepreneurs from funds deposited in an account in the name of the Secretary of the Ministry of Agriculture and Plantation at the Head Office of the Bank of Ceylon. Beneficiaries can choose between the Bank of Ceylon, People’s Bank, and the Regional Development Bank for their loan processing.

The loan concession period is up to 6 months, with a maximum repayment period of 5 years, including the concession period. The agriculture modernisation centres determine the specific concession and repayment periods based on the loan amount and the nature of the project undertaken by the farmers or agribusiness entrepreneurs.