Credit Programs of Bangladesh Krishi Bank

Bangladesh Krishi Bank (BKB) is the pioneer of agricultural credit in Bangladesh. Bangladesh Krishi Bank
has been established as a full Government owned bank under Presidential Order 27 of 1973. BKB provides
credit facilities for farmers, marginal farmers, extreme poor, sharecroppers and people who are the real
players in making agricultural outputs and success of rural economy.

BKB has received the ‘Letter of Appreciation’ from Bangladesh Bank for its outstanding achievement in
agricultural loan disbursement.

Agriculture is the most important and profitable sector in Bangladesh. All of our economic activities have
been developed based on agriculture. In this case Bangladesh Krishi bank is the leading financial institution
for financing in agriculture.

3.2 Credit Policy of BKB

Bangladesh krishi bank decided to prepare a five years plan to disburse loan in different sector. The
key point of their planning is given below:

► To develop and expansion of agriculture the bank will provide loan to all agro-based sector which
involve in Agriculture.

► To facilitate, modernized, profitable of and to improve the life style of rural people BKB will pay
special attention to the 7 sector such as: Crops, Fisheries, Live stock, Agro-equipment and firm
machineries, Agro based industries, Continuous loan, Poverty alleviation and Micro-credit program.

► To identify different sector which increase the price of agro product and distribution BKB work for those
sector and give loan to improve the situation.

► To face the growing amount of loan demand in every year BKB will increase the amount of loan disburse
in the agricultural sector.
 Classifications of BKB’s credit disbursement

The total credit disbursement of BKB can be classified into three major groups these are:
1. Short term loan
2. Medium term loan
3. And long term loan

Classification of Credit

Short term Medium term Long term

Crops loan Fisheries Live stock Socio economic

loan(digging loan activities
ponds, lake)

Working capital Irrigation and farm Agro based Industries

Loan machinery loan
Example: Tractor

White fish Shrimp culture( Fish & shrimp

loan Marine, sweet water hatchery
culture

Poultry Dairy Food Exportable Import

firm firm processing items substitute
 Discussion on BKB’s Credit Disbursement Program

1. Short term loan: Bangladesh Krishi Bank provide such loan to all sort of people, especially the
poor and marginal farmer as well as low income people for the very short term basis. The
duration of this loans are 1 to 18 months. Such loans are Crop loan, Continuous loan, Fishery
loan.

2. Medium term Loan: BKB provide such loan for the period of 18 months to 5 years.

3. Long term Loan: This loan is provided for the period of 5 to 10 years.

Credit Programs

BKB finances the following seven sectors, which are given below:
• Crop
• Fisheries
• Live Stock
• Agro-equipment and farm machineries
• Agro processing industries
• Continuous Loan
• Poverty Alleviation and Micro Credit Programs
• Special Recovery Activities/ program

Crop Loan
Out of total annual allocation of Loan portfolio, 60% is earmarked for Crop financing. The rate of
interest for this sector is 10%.
• Crop loan is sanctioned on annual basis.
• Credit passbook is issued to each borrower.
All sorts of farmer including marginal farmer are also eligible for the loan
 Fisheries Loan
The Loans are given in the following sub sectors:
White Fish
• Fish culture in existing pond/tank
• Fish culture by re-excavation of old/derelict tank/tank
• Fish culture by excavation of new tank/tank
Shrimp culture (Marine, Brackish water and sweet water Culture )
• Shrimp culture in traditional system (Bagda or Tiger Shrimp)
• Shrimp culture in scientific system
• Shrimp culture in semi-intensive method
• Prawn culture in sweet water(Galda)
This loan is given mainly in coastal areas for developed technology based shrimp culture.
Fish & Shrimp hatchery (fingerlings production)
• Fingerlings production in sweet water
• Shrimp fingerlings production (fingerlings of commercially profitable technology)

Live Stock & Continuous Loan

Beef Fattening Program :

With a view to creating self employment for the poor and un-employed people of the country the bank
has introduced a new program titled “Beef Fattening”.
Objectives of the program
• Create self-employment opportunity for poor and un-employed people.
• Meet national deficit of animal protein.
• Bring positive change in the attitude of the people through training.
• Ensure participation of bank officials in the program and increase their sense of duty and
consciousness.
Main Aspects
• Purely supervised credit.
• The bank officials giving guarantee are responsible for recovery of loan.
• Each borrower will get maximum Tk. 25,000/-for 5 calves ( each Tk. 5,000/-)
• Loan is collateral free.
• Repayable within one year.
 Continuous Loan

• The bank is providing continuous loan for different types of activities as cash credit/working
capital loan on short term basis.
• Continuous loan is given for processing, preservation and marketing of agricultural products.

Agro Equipment & Farm Machinery Loan

BKB offers credit facilities both for production and marketing of different agricultural equipment and
farm machinery including irrigation equipment. All sorts of irrigation equipments like LLP, HPTW, STW,
DTW are eligible under the sector.

Agro Processing Industries

As an agricultural country different types of crops and fruits are produced here. Project under joint
venture as well as direct foreign investors are specially taken care of.
Poultry farm
• Poultry broiler farm
• Poultry layer farm
• Poultry (broiler/layer) hatchery
• Poultry farm related/dependent project

Dairy farm
• Milk production
• Milk collection, milk processing (ghee, butter, pasteurized milk etc production) and marketing.

Food processing project

 • Fruit based food preparation, processing, preservation & marketing
• Flour, bread & biscuit vermicelli, noodles, chips., chanachur, corn flakes, potato flakes, French
fry, popcorn, baby food, starch etc
• Juice, jam, jelly, tomato ketchup, sauce, pickle etc production & marketing
• Spices processing
• Different types oil mill, dal mill etc
• Small processing industry at farm level
• Dehydrated fruit canning, packaging, preservation & marketing

Exportable items
• Fish processing
• Freezing plant
• Dehydration plant (for dry fish processing)
• Salting and Dehydration of Jew fish.
• Leather process & leather based products item
• Vegetables
Import substitutes
• Leather and Leather Goods
• Fish net/net thread production
• Garments accessories (garments allied industry like washing plant, packaging etc)
• Organic fertilizer, mixed fertilizer, urea super granules etc production & marketing
• Insecticides production
• Bio-pesticide, neem based pesticide production

Micro credit program under Poverty alleviation

• Credit program for landless and marginal farmers.

• This micro credit program of BKB was launched with BKB’s own fund in 1992-1993
financial years through its all branches.
• About 1388928 beneficiaries have provided with Tk.9949.00 million since its
inception.
 • Person or peasant having not more than 1.5 acres of cultivate land and annual income of highest
Tk.25000 are eligible for getting credit under this program.
o After information of groups and obtaining training the groups and obtaining training the
members get credit without any collateral security.
o Under this program, the interest rate for the landless and marginal farmer is 10%

Swanirvar Credit Program

[] Under the micro credit program BKB has been implementation Swanarvir Credit program without
collateral security since 1979.
[] Under the swanirvar credit program the beneficiaries who have maximum 40 acres of cultivable land
and maximum annual income Tk.20000 are capable of getting credit.
[] Under this program the maximum credit amount is Tk.1000 for per member.
[] In this case credit is collateral free but group guarantee for each other is needed.
[] This program consists of 10% rate of interest.
[] Till the financial year of 2004-2005, about 258016 beneficiaries have been provided with Tk.1197.30
million since it’s inception

► Small farmers and landless labor’s development project:

[] This micro credit program is being implemented jointly by BARD & BKB from 1995 through 21
branches under 6 region of Bangladesh Krishi Bank.

[] The objectives of this project are to increase production, employment creation and increase
income of the small and landless farmer and laborers through: Formation of small groups, Generation of
own capital.

[] Provision for capital support for undertaking various income generating activities.
[] Number of beneficiaries under this program small farmer and landless laborers who have
maximum 50 acres and .50-1.5 acres cultivable land are eligible for having the loans.

[] Under this program interest rate is 15% of which 10% for BKB and 5% for BARD

[] From its inception 28236 beneficiaries have been provided Tk.193.80 million.
 South Asia poverty Alleviation Program

♦ BKB’s this program was launched on the basis of Dhaka conference of SAARC countries in 1993.

♦ This program is a joint venture with UNDP.

♦ It is an area based credit program and only Kishorganj Sadar upazila is the command area of this
program.

♦ It is miss the BKB’s own financed program and in this case UNDP do the following:

(i) Organize the beneficiaries

(ii) Trait them and
(iii) Finally recommends the loan

♦ The maximum credit limit is Tk.25000 for per beneficiaries.

♦ Number of beneficiaries under this program is about 36179 which total amounts stand 325.50 million
since its inception.

United Nations Capital Development fund

♦ This program started in 1983 with the objectives of financing Rural as well as cottage industries.

♦ This is joint venture program with BKB Basic and UNCDF.

♦ This program covers 29 district and its rate of Interest is 10%-14%.

♦ It’s a collateral free credit.

♦ About 21439 beneficiaries have been provided with the Tk.110.50 since its Inception.
 Rural women Employment Creation project ADB loan No. 1067 BAB (SF)

♦ This is a joint project of BKB started in 1993 for the purpose of employment creation for poor women
in the rural areas.

♦ Department of Women Affairs(DWA)- 19 NGOs in 12 upazillas and BKB jointly implementing this
project.

♦ This project is also collateral free and interest rate is 12%.

♦ About 72266 beneficiaries have been provided with Tk.1424.60 million from its beginning.

BKB NGO micro Credit Program

This program is replication of rural women employment creation project (RWCEP) and in this case
NGOs organizes individuals into groups provides them training and recommends for credit.

♦ BKB provides credit from its own fund.

♦ This is also a collateral free credit and interest rate is 12.5%.
♦ About 18319 beneficiaries have been provided with Tk.143.10 million since its inception.

► Credit under National poverty alleviation program through Goat Rearing.

♦ BKB s this program have been introduced in 2002 aiming to eradicate poverty through goal rearing.
♦ This is also a collateral free credit of BKB and its interest rate is 10%.
♦ About 12671 beneficiaries have been provided with Tk.115.70 million since its inception.

Milching Cow credit program for the women

♦ This program was initiated in 1997.

♦ Under this program one village of a branch area is selected and one women from each is selected
and one women from each family of the selected village is eligible to get this credit facility.
♦ In this project an applicant gets maximum Tk.10000 to purchase a calf and its interest rate is 8%.
♦ This is also a collateral free supervised Credit.
 Special micro credit program for the disabled

♦ This program has been introduced in 2002 for the purpose of income generation and development
of socio-economic condition through employment creation for the disabled person.
♦ It is also a collateral free credit and Interest rate is 10%.
♦ About 75 beneficiaries have been provided with Tk.1.00 million since its inception.
►Micro Enterprise development for the monipuri (MEDM) credit program
♦ Program was launched in 2003 aiming to provide working capital credit to handloom industry
operated by Monipuri women.
♦ This is also a collateral free credit program provided from the bank’s own fund and interest rate is
10%.
♦ About 105 beneficiaries have been provided with Tk.2.3 million since its inception.

► Special credit program for the Rakhains under the district of Cox’s Bazar

♦ This program was launched in 2003 for the purpose of providing working capital credit for producing:
Handloom and cottage industrial products and its marketing.
♦ Collateral free credit program with interest rate is 10%.
♦ Number of beneficiaries 385 with the 8.10 million since its beginning.

Tree plantation program

♦ In 2002 and 2003 BKB launched 8 tree plantation program.

♦ Credit under this program is collateral free upto Tk.25000 with interest rate is 8%.
♦ Number of beneficiaries are 4800 provided with Tk. 153.10 million since its inception.

Establishment of breeding farm of black Bengal goat program

♦ Under this program a farm comprising 50 goats is considered as a small firm and a farm comprising
51-200 goats is considered as a big farm.
♦ The loan is medium term and credit limit is Tk.30000 for a small farm.

Community Based resource management project

 ♦ This project started in 2003-2004 fiscal year.
♦ It’s a joint venture project of BKB, IFAD and department of LGRD of GOB.
♦ This project has five following components. This are:
1. Infrastructure development.
2. Development of fisheries.
3. Crop and livestock development.
4. Grass roots institutional development.
5. Finally small credit Bangladesh Krishi Bank deals with small credit component of the
project.
♦ Bank provides both short term and medium term loan. For the short term they maximum granted
credit is Tk.14000 for each member and for the medium term the maximum amount is Tk.27000 for each
members.
♦ Its is also collateral free credit with Interest rate of 15%.

Main objectives of BKB’s credit financing are given below

► Create employments opportunities through income generating activities.
► To empower the Rural women’s to established their own rights.
► Improve the living standard of the rural people.
► Alleviate poverty of the poor people.
► To make easy access to institutional credit facilities and resources.

► Mobilize rural savings.

► To make optimum utilization rural resources.
► Engage inactive human resources of the rural areas in productive and economic activities.
► To eliminate exploitation done by money landers.

Achievements In Fisheries:
• In fisheries, the credit disbursement is Tk. 22.48 higher in current fiscal year than the previous
year.
• The rate of incensement in fisheries in the year almost 33%.
• The recovery rate in fisheries is 29% in which recovery is Tk.25.96 crore out of total disbursement
Tk.92.48 crore.
 • The number of beneficiaries is 1701 higher than the previous fiscal year and higher in shot term
loan disbursement which is 15026 in this year.
Achievement in Live Stock:
• In live stock sector, Tk.(172.12-152.41) = Tk.19.71 crore is higher in this & (2004-05) Fiscal year’s
credit disbursement which is 13%
• The rate of recovery in Live Stock is 74% in this fiscal year, and it is 23% less than the previous year.
• The incensement in the number of beneficiaries in Live Stock is 5530
Achievement in Farm Machineries:
• In the sector of Farm Machineries. The increase credit disbursement in this fiscal year ()2004-05
is Tk (15.19-13.88) = Tk.1.31, which almost 10% incensement than previous year.
• The recovery amount is almost outstanding and it is Tk. 10.56.
• The incensement in the number of beneficiaries in Farm Machineries is 636, in which beneficiaries
in short term Credit is much higher which are 2862 and 1867 in the current and in the previous
year respectively.

Achivements in Agro-based industries:

• In agro- based industries the incensement in credit disbursement is TK(254.82-71.61) = TK.183.21
crore in this fiscal year (2004-05) than the previous year.
• The recovery of credit in this sector is also outstanding and it is TK.108.70 crore in the fiscal year
2004-05.
• The number of beneficiaries in Agro-based industries have been decreased a little number and it
22 in 228.

Achievement in cash/ Continuous Credit:

• In this sector the amount of disbursement in this year is the highest than the last couple of years
and it is TK.489.62 crore in this amount is TK(489.62-413.59) TK. 76.03 higher than the previous
year .
• The rate of incensement is disbursement is 19%
• The amount of recovery in this sector for the year of recovery in this sector for the year of 2004-
05,is Tk. 196.33 crore, which is TK (261.89-196.93)- Tk. 69.96 thatn the previous year.
• The number of beneficiaries in cash credit has increased in 177362 in which beneficiaries of
working capital is such higher and it is 179530 in this year.
 Achievement in Socio-Economics Sector: and Micro-credit Sector
• In this sector the total credit disbursement in the fiscal year 2004-05 is Tk. 58.86 crore, which is
TK.(68.16-58.86) = Tk. 9.3 less than the previous year.
• The amount of recovery in this year is Tk.3727 crore.
• The number of beneficiaries have decreased in this fiscal year (2004-05) are (73425-64654) = 8771

Achievement in other:
• There are some various sector in which the increased disbursement in TK(187.54-150.22) = Tk
37.32 in the fiscal year of 2004-05 than the previous year.
• The rate incensement than the previous year is almost 25%.
• The number of beneficiaries have decreased in the fiscal year are 2449.
• There are the major achievement of BKB”s credit Disbursment