Bangladesh Krishi Bank (BKB) established in 1973 as a specialised government bank for agricultural development under the Bangladesh Krishi Bank Order (P O No. 27 of 1973). It is the successor to the former Agricultural Development Bank of Pakistan which was established in 1961 through merging the Agricultural Development Finance Corporation (established 1952) and the Agricultural Bank of Pakistan (established 1957) into one institution. Initially, the authorised capital of the bank was Tk 500 million and its paid up capital was Tk 370 million, subscribed fully by the government. Later, in view of the increased volume of banking activities and business, the authorised and paid up capital of the bank were raised to Tk 2 billion and Tk 1 billion respectively.
BKB provides credit facilities to individual and corporate bodies engaged in crop production, horticulture, forestry and fisheries. It also offers financial and technical assistance to agro-based and cottage industries. Its charter requires the bank to act on commercial considerations but with due regard to the development of agriculture, and agro-based and other related industries in rural and urban areas. Under the provisions of its charter, BKB is supposed to give preference to the credit needs of small farmers and other disadvantaged groups. BKB, therefore, has to fulfil both social and economic objectives. Being a scheduled bank, it also receives deposits in various accounts, performs foreign exchange business, and other banking functions.
BKB was issued authorised dealership licence in 1981 by the bangladesh bank for dealing in foreign exchange. In the same year, BKB set up an International Department at its head office. Since then BKB has been participating actively in the foreign exchange business and offering overseas remittance services through its 11 authorised branches for dealing in foreign exchange. The total volume of foreign exchange business handled by the bank in servicing imports, exports, and remittance during 1999-2000 amounted to Tk 5.25 billion compared to Tk 1.32 billion in 1983-84, and Tk 711 million in 1982-83. In 1999-2000, the share of servicing exports in foreign exchange dealings by BKB was 42.86% and that of servicing imports was 40%, and remittances accounted for 17.14%. At
present, the bank has correspondent relationships with 98 foreign banks/bank offices throughout the world.
Soon after liberation, the government appointed an administrator to look after the affairs of BKB. In accordance with the provisions of the Bangladesh Krishi Bank Order, a managing director took overall charge of the bank in April 1973. In March 1975, the government constituted a board of directors for the bank and until March 1981, the managing director served as the ex-officio chairman of the board. In April 1981, two separate offices of the chairman and managing director were set up and the government appointed a non-official director as chairman of the board. The managing director continued to be the bank's chief executive. At present, the board of directors of the bank consists of 11 directors, including the chairman. The bank's head office in dhaka has 7 departments viz., administration, credit, finance, operation, planning and recovery, audit and inspection and the international departments. Each department is headed by a general manager.
In 2001, BKB had 844 branches (77 urban and 767 rural) all over the country. The number of branches of the bank was 197 in June 1978 and 871 in March 1984. The branches in the districts of rajshahi division were separated from BKB to form a regional agricultural bank in March 1985. This was named as the rajshahi krishi unnayan bank. Other BKB branches have been put under divisional offices, which also have regional offices, each headed by either a deputy or an assistant general manager. The total number of employees of BKB was 11,523 on 31 December 2000 as against 3,180 in 1977 and 9,862 in 1984.
For effective administration of credit and supervision of branches, a regional auditing system has been introduced in the bank. Under the system, inspection teams from regional offices visit branches for verification of all aspects of their operations and make on-the-spot corrections as and when appropriate.
During the early years of its establishment, a major source of BKB's funds was the refinance from Bangladesh Bank. The bank gradually reduced its dependence on Bangladesh Bank by increased mobilisation of deposits in its accounts. Deposits rose at an annual rate of 90% during 1977-78 to 1980-81 as compared to an annual growth rate of 63% during 1972-73. The end of June deposits at the bank rose from Tk 1.761 billion in 1982 to Tk 31.431 billion in 2000. The advances made by the bank during 1977-78 to 1980-81 grew at an average rate of 93% as compared to 70% during 1971-72 to 1977-78. In 1983, the BKB has advanced Tk 4.272 billion to 876,000 borrowers. Its total loans and advances rose to Tk 39.81 billion in 1998 and Tk 49.47 billion in 2000. Total overdue and classified loans of the bank in these two years were Tk 16.08 billion and Tk 25.79 billion or 40.40% and 52.14% respectably of total outstanding loans and advances. The low recovery rate and higher rate of non-performing overdue/classified loans worsened the performance of BKB and resulted in a reduction in the agricultural credit available for small and marginal farmers.
Bangladesh Krishi Bank made a total investment of Tk 1.453 billion in government securities, treasury bills, and debentures during 1998- 2000. The bank's total liquid assets on close of the calendar years 1998 and 2000 were valued at Tk 10.31 billion and Tk 3.93 billion respectively and the total value of all assets of the bank on these dates was Tk 63.09 billion and Tk 69.81 billion. The assets that arose from the bank's off-balance sheet amounted to Tk 3.284 billion in 2000.
The bank gives preference to financing crop production in a package. It offers short, medium, and long-term financing for production, processing, warehousing and marketing of agriculture and agro-based industrial products. Loan terms are determined by the purpose for which it is given, the gestation period, and income generating capacity. The bank provides short-term loans generally for seasonal agricultural production activities. The medium-term loans are sanctioned for acquisition of farm machinery, low lift pumps, hand pumps, agricultural implements, bullocks, carts, goats, dairy, poultry, and draft animals, transportation facilities for agricultural produces, and related development activities. Long-term loans are advanced for capital expenditures including purchase of tractors, power tillers and shallow tube wells, construction of ice plants, establishment of agro-based industries, extension of tea gardens or investment in horticulture, forestry and fisheries. Amortisation period for short-term loans is 18 months, for medium-term loans up to 5 years and for long-term loans over 5 years.
The major economic areas in which Krishi Bank lends (and the amount advanced up to 30 June 1999) are agriculture, hunting, forestry and fishing (Tk 25.785 billion), industries of all categories (7.483 billion), wholesale and retail trade, and hotels (1.262 billion), insurance, real estate and business services (1.617 billion), transport, storage and communication (613 million), special credit programmes, including poverty alleviation (2.633 billion), and others (3.763 billion).
Apart from the above areas, BKB provides about Tk 14 billion annually in financing numerous projects and special programmes such as the Special Agricultural Credit Programme, and in helping contract growers of BADC, funding schemes of potato cultivation and preservation, tea plantation, and installation of hand pumps, shallow and deep tube wells, the Rural Finance Experiment Project, projects in dairy farming, poultry, fisheries, aquaculture and livestock, loans for production and marketing of tobacco, banana and cotton, the Betagi Community Forest Project, Swanirvar Bangladesh, and financing self-employment schemes of educated unemployed youths.
The total and net income of the bank on 30 June 2000
was Tk 3.65 billion and -Tk 1.89 billion respectively. The corresponding
figures for 1998 were Tk 1.7 billion and -Tk 5.1 billion. The main reason
for the bank's net losses during the last two decades was its excessive
non-performing overdue/classified loans for which it had to maintain provisions.
Other reasons included a decline in net interest income and commission
and exchange incomes and increase in operating expenses. [S M Mahfuzur