Bangladesh Krishi Bank was established under BKB order 1973 (President’s Order No. 27 of 1973). It is the successor of the former Agricultural Development Bank of Pakistan which was established in 1961 by the merger of Agricultural Development Finance Corporation established in 1962 and Agricultural Bank of Pakistan established in 1957. It is 100% Government-owned specialized bank engaged in agricultural financing. Here we discuss the function and loan portfolio of Bangladesh Krishi Bank (BKB)
Functions of Bangladesh Krishi Bank
Bangladesh Krishi Bank is the premier agricultural credit institution of Bangladesh engaged in the development of agriculture, cottage industries, agro-based industries and fostering rural economic activities.
It finances all sorts of agricultural activities. Major financing sectors are:
- Crop production
- Marketing, Transportation, Import and export of agri-products and machinery
- Horticulture and Nursery and
- Cottage industry
In respect of institutional credit in the agricultural and rural sector, Bangladesh Krishi Bank occupies the predominantly leading position.
By providing a credit of small and medium terms to landless farmers in rural areas BKB is playing a vital role to increase crop production in the country. On the other hand, it is immensely assisting the rural people for their socio-economic development. Diversification of loaning has been the key-note of the policy decisions of the bank during the past few years.
The bank has thus taken up for financing a wide field of activates under normal credit as well as project programmes like
- Minor irrigation facilities,
- Aquaculture development,
- Ice making plants,
- Setting up of cold storages,
- Construction of warehouses,
- Rice and wheat milling,
- Processing and storage of shrimp,
- Marketing of fishery and agricultural produces,
- Manufacture of agricultural equipment,
- Lift pumps,
- Setting up of hand-loom industry in rural areas,
- Development of inland fishery,
- self-employment of educated unemployed youth, landless, unemployed and under-employed males and females in the rural areas
In respect of productive and income-generating farm activates betel-leaf (pan) cultivation, goatery, sheep farming, beef fattening, projects, agriculture, promotion of cottage industries and locally manufactured agricultural implements. Practically, all rural economic activates are financed by the bank.
Micro Credit: Besides implementing own credit programmes, the bank had undertaken to finance various prefects in rural areas in poverty alleviation activities under micro-credit programmes with the help of and in linkage with various donor agencies, Government and Non-Government Organizations.
In the recent past, the bank has launched a new credit programme for the rootless people living in city slums to rehabilitate them in their own village under the programme entitled “Chhinnamul Manusher Swagreehey Prattabashan Karmashuchi”-(CHIMASHAP).
The programme means the return of the rootless people to their native village. The Bank provides small credit among the rootless people who left their homes due to poverty and are now living in different city slum areas under sub-human level.
Apart from its loan-giving activities, the bank also performs other ancillary functions, e.g., normal banking functions including foreign exchange business like other commercial banks, imparting training to its officers in bank’s own training institute, evaluation of on-going schemes and, extension and advisory services to the loanees especially in the case of project loans.
Loan Portfolio of Bangladesh Krishi Bank
The loan portfolio of the bank has been increasing with wider coverage and an incremental number of beneficiaries.
BKB’s loan portfolio can broadly be divided into four categories:
- Loans for crop production and related activities which include various types of Crop, Fisheries, Livestock, Poultry, Horticulture and Agri-machinery and equipment.
- Project loan on Agro-based industries which include both capital and working capital loans for the agro-based industries like Poultry and Duckery farm, dairy Farm, Fisheries Project, Shrimp Culture, Tea Industry, Rubber Plantation, Cold Storage, Food Processing Industry etc.
- Marketing and export credit which include marketing and storage of agricultural products dealing in fertilizer and insecticides, agriculture equipment, the export of shrimp, leather, tea and garments.
- Programmes of socio-economic activities which include various programmes on poverty alleviation for both men and women, rural women employment creation project, women’s entrepreneurship development project, youth development programme etc.
It finances in small and medium and to landless farmers in coproduction, simultaneously, the bank is financing the rural poor for their socio-economic development.
Loan Period: Bank advances loans for short, medium and long terms. The term of the loan is determined on the basis of the gestation period of a project and generation of income by use of the loan.
Short Term Loans: Period of amortization is over 18 months. Such loans are generally provided for seasonal agricultural production activities.
Medium-Term Loans: Period of amortization is over 18 months and up to 5 years. Such loans are used for acquisition of farm machinery, shallow tube-well (project) lift pump, hand pump, agricultural implements, bullock carts, boats, dairy, poultry, for purchase of draft animals and for transportation facilities for agricultural produces etc.
Long Term Loans: Period amortization is over 5 years. Such loans are advanced for heavy capital investment and projects having long gestation period, e.g., tractor, power tiller, shallow tube-well, construction of ice plants, an extension of tea gardens and development of horticulture, fishery, etc.
Security: Short-term loans are generally granted on pledge or hypothecation of crop production and also against the surety.
Medium and long term loans are granted against security of land or building, bank guarantee, fixed deposit, farm machinery and other assets created out of loans. In the case of big projects, loans are granted on the security of the project on an average 30 per cent participation by the loanee in project cost.
Bangladesh Krishi Bank loans made a wide economic and social impact. Various economic activities created and supported by BKB loans substantially helped ease unemployment and under-employment problem in the rural areas.
The bank’s policy and procedure are constantly reviewed so as to include more small farmers and operators within the fold of its credit programme to make optimum use of natural resources and create employment opportunities in rural areas.
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