Economy, Business And Markets

Improving Mechanized Agriculture Top Priority

Improving Mechanized Agriculture Top PriorityImproving Mechanized Agriculture Top Priority

More than 90 percent of Bank Keshavarzi’s (Agri-Bank) facilities have been directed at the agriculture sector including farming, livestock, poultry, fisheries, forestry, farm mechanizations and related industries, an official in the bank said.

As one of its major plans, Bank  Keshavarzi has so far financed two mechanization projects in the agriculture sector. The first project that started in 2013 and completed in mid-2014, cost 7,500 billion rials (around $230 million based on market rate).

A new project also started in August 2014 to which the bank has so far contributed 1,890 billion rials, Mohammad Talebi, the managing director of the bank said to ISNA.

“The bank mainly grants micro credit loans rather than  lump sum loans. In this respect, facilities under 200 million rials are considered as micro credit. The whole process of credit allocation to farmers is done electronically and it is expected that within two years credit cards are the only channel of transaction between the bank and farmers”, Talebi added.

He dismissed reports that banking facilities allocated to agriculture sector had declined based on central bank statistics and said “the figure in fact has increased compared with last year. However, the central bank does not base its reports on ISIC (a defined international code for each economic activity),as the growth has not been mirrored in the statistics”. He called on the central bank to make “the required modifications” in this respect to prevent ambiguity.

With response to certain complaints regarding Bank Keshavarzi’s refusal to apply the government’s newly-approved 17-percent interest rate on facilities, Talebi clarified that within a week from the day the new rate was approved, the bank had updated the relevant systems and all the facilities have been granted under the said interest rate.

In late August, interest rates on agricultural facilities were reduced from 22 percent to 17 percent through a presidential decree. Up until now, no subsidy has been granted to the bank to make up for the reduction, according to Talebi.

In light of the difficulties faced by loan applicants in providing collateral, he explained that the problem was not specific to Keshavarzi Bank but all the banking system and that validation companies to check the background and references of applicants could serve as a solution to address the issue.