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INTERVIEW

A banker to farmers

Krishi Bank chairman shares a new idea with

REJAUL KARIM BYRON
Fair price is the key to contentment for a producer. But the farm ers of Bangladesh are often deprived of desired price as tlieir production costs do not match the selling price. Middlemen try to eat up their benefits. It has been a long standing problem.
So comes Bangladesh Krishi Bank to their rescue, now, with an innovative idea.
Chairman of the bank Khondkar Ibrahim Khaled said the bank is going to introduce a financing system under a new model styled "Producers' Cooperative Society" to ensure fair price for the farmers.
Khaled said about 100 to 250 farmers would form a cooperative society and build a fund through subscription. After that, Krishi (agriculture) Bank would finance to build a warehouse at lower cost.
The farmers will then keep their produce in the warehouse and sell to either the government or other buyers at fair price, the veteran banker said in an exclusive interview with The Daily Star.
"We will introduce the model on an experiment basis in some areas and if found successful, the model will be spread to other areas of the country. Other banks may also follow us," Khaled said.
"We have noticed that the farmers do not get fair price. The present government is farmer-friendly. It gave fair price of rice but the farmers did not get the benefits due to the presence of the middlemen. The middlemen gobble up the benefits as the marketing system in the rural areas is very weak."
However, sensing an alarm, he said if the system is introduced, the middlemen may get angry and can even harm the members of the cooperatives. "So the government will have to ensure protection for them."
Khaled served as the chief executive officer (CEO) of about half a dozen state and private banks. He was also a deputy governor of the central bank.
The biggest agricultural loandisbursing bank, which distributes about 55 percent of farm loans, could not see profit since its inception. After Khaled took over as its chairman last fiscal year, the bank made a profit ofTk 12 crore.
About the finance minister's
recent statement that a wholesale rescheduling of banks' loans would be done to face the fallout of global recession, he said. "It won't be proper to do it on a wholesale basis. The bank concerned and its board should take decision on case-to-case basis. The finance ministry or the Bangladesh Bank doesn't need to give any decision in this regard. "
He said it has been seen that during the anti-corruption drive of the last caretaker government the bad people were affected mostly. “Some good businessmen were also affected.” Giving an example, he said in a drive in Chittagong most of the warehouses of the businessmen were sealed. But that does not mean that all businessmen there were bad.
However, in this regard the bank concerned can determine who has really suffered. So the
responsibility should go to the bank, not to the finance ministry or the Bangladesh Bank, Khaled said.
About Krishi Bank's making profit, he said usually it gives low-cost loan in the rural areas and those loans are not recovered properly. As a result, the bank incurs loss. So the scope for minimising loss from loans given in the rural areas is little.
"So I took a different approach -- cross subsidisation."
Khaled said: "In Chittagong I invited businesspeople at a meeting and told them that if they do business with Krishi Bank, they will be benefited. Many businessmen came forward. They were given non-funded facilities. On the other hand, a group of young officials of the bank was trained in foreign exchange and deployed in some particular branches. So they could provide the best services to
the businessmen there."
As a result, Krishi Bank's income increased in exportimport sector, he said. The bank's import business increased by 27 percent, export business by 24 percent and remittance income went up by 34 percent last fiscal year.
The chairman said it is one of the ways "we managed to increase our income and made profit"
Replying to a question regarding allegations of corruption and harassment against Krishi Bank, he said, "I won't say corruption does not exist at all at Krishi Bank. But it has dropped substantially."
Giving an example, he said he and the members of the board launched a special drive last year. "We all went to some Barisal villages hiding our identities. We talked to some farmers in the villages about corruption. When
we met in the assessment meeting in the afternoon, each member said they did not receive a single allegation ofcorruption."
The farmers told them that corruption existed in the past but not now. General Manager for Barisal Zone Krishi Bank Siddiqur Rahman was a freedom fighter. He extensively visits the villages and encourages his officers to do so and remain corruption-free.
Later the bank gave him (the GM) a special award for his role in cuttingcorruption.
Such incident may not happen in other areas. But high officials of Krishi Bank frequently visit the village areas and try to change the culture of corruption, Khaled said.
Loans are given through field supervisors of the bank who are very low-paid. "We are trying to increase their salary so they don't indulge ingraft."
Khaled said now the role of Krishi Bank has increased much more in distributing loans in the villages. Another programme taken is a special drive for collection of deposit for districts including Dhaka and Chittagong. "If the deposit collection is higher, we can increase financing in the rural areas."
"If the programmes are successful, our dependence on the Bangladesh Bank for loan to refinancewill lessen," Khaled said. *
On default loan, he said. "Another success of Krishi Bank is that its default loan has come down substantially. About three years back the default loan was about 40 percent In June this year it came down to 22 percent. It's a big success. It was possible due to continuous monitoring."
Krishi Bank contributed much to the victims of cyclones Sidr and Aila. He said all the loans given to the Sidr victims were rescheduled. The bank fears 50 percent of those loans will not be realised.
The Krishi Bank charter provides that the government takes over the loss. A huge amount of money was claimed by Krishi Bank to the government on account of loss. After the present government came to power it paid about Tk 900 crore such loans to the bank. About Tk 1,000 crore is still pending in this account. The bank hopes the government would soon pay the amount, which would enable it to expand its rural finance programme.