Bangladesh Krishi Bank

Bangladesh Krishi Bank (BKB) is the largest specialised national bank for promoting agricultural credit. Established in 1973 under the Bangladesh Krishi Bank Order (P.O No. 27 of 1973), the BKB is the successor to the former Agricultural Development Bank of Pakistan, which was established in 1961 through merging the Agricultural Development Finance Corporation and the Agricultural Bank of Pakistan 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. In 2008 both the authorised and paid up capital has been raised to 3.5 billion.

Aiming at the economic development in the rural area, BKB was created for helping overall development of the agricultural sector to attain food sufficiency. Though Bangladesh Krishi Bank is a specialised bank for the agricultural sectors it operates normal banking like other commercial banks. In conjunction with its prime function of disbursing agriculture credit BKB is also involved in foreign exchange business, trade and investment finance, agro-based project financing, providing running capital to retail, wholesale and SMEs, microcredit and poverty alleviation activities. BKB played a vital role in the rehabilitation schemes operated after cyclone Sidor in 2007. For foreign exchange business BKB has 15 authorised dealing branches and correspondents arrangement with 225 overseas financial institutions. Through these branches BKB is able to reach the remittances to the beneficiaries within 3 days. 82 branches of BKB have been brought under one stop service provision scheme.

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.

Table Basic facts and economic indicators  (in million Taka).

Indicators 2004 2005 2006 2007 2008 2009
Authorised capital 2000 2400 3000 3000 3500 15000
Paid up capital 2000 2400 3000 3000 3500 9000
Reserved Fund 1242 1305 1338 1369 1540 2060
Deposits 49700 55960 63413 66307 79517 93447
(a) Demand Deposits 4755 5408 6508 7366 7673 10351
(b) Term Deposits 44945 50552 56905 58941 71844 83096
Loans and Advance 59304 61407 70056 73286 83448 91798
Investment 1688 1719 1608 1608 1492 1512
Total Asset 87416 95284 102396 102396 117823 140816
Total income 4198 3923 4731 4731 6501 9866
Total Expenditure 5606 5767 6504 6504 8467 9741
Foreign Currency Trading 11992 20268 27620 31212 35852 45959
(a) Export 4840 5631 7568 9086 10844 13467
(b) Import 5580 12183 16772 16831 18130 22979
(c) Remittance 1572 2454 3280 5295 6878 9513
Total Manpower 10779 10617 10454 10236 10530 10313
(a) Officers 4642 4634 4501 4365 4756 4717
(b) Staff 6137 5983 5953 5871 5774 5596
Correspondents Banks 179 181 188 190 215 225
Total Branches (in numbers) 929 938 942 948 950 952
(a) In Bangladesh 929 938 942 948 950 952
Agricultural Credit
(a) Loan Disbursed 12605 12668 17600 16799 16709 17366
(b) Realised 13073 8913 14548 17873 15371 15349
Industrial Credit
(a) Loan Disbursed 3883 3988 5511 7244 7105 7964
(b) Realsied 3576 3156 4679 6771 6814 8542
Loan Outstanding by Sector
(a) Agriculture and Fisheries 36933 45393 50799 50742 56109 57175
(b) Industry 6558 6975 9079 10245 10048 9783
(c) Trade and Commerce 2647 1608 2549 2753 5715 9849
(d) Poverty Reduction 3200 2130 2207 2410 1320 3415

Source Government of Bangladesh, Ministry of Finance, Banking and Financial Institution Division, Bank o Arthik Prothisthan Samuher Karjaboli [Annual Report on Banks and Financial Institutions], 2004-05 to 2009-10.

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 fulfill both social and economic objectives.

The bank 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 loan is 18 months, for medium-term loans up to 5 years and for long-term loans over 5 years.

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

BKB prepares annual work plan with a mission and vision to attain self-sufficiency in food through development of agriculture, producing import substitute agro products, meeting the growing demands for agricultural credit, and identifying appropriate areas for agricultural development projects to attain sustainable growth in the sector.

BKB has introduced some Small Savings Schemes for those marginal groups in addition to their normal deposit programs. BKB has launched a seven-year tenure 'Bangladesh Krishi Bank Sanchoya Scheme' in 2008. Under its social and poverty reduction strategy initiatives BKB is providing loans and banking facilities to share croppers on easy terms. [Muhammad Abdul Mazid]