Kamrul Mehedi
Head of SME (Small), Microfinance and Agent Banking, City Bank

To better facilitate our farmers through agri-loans, financial institutions can adopt a more localized approach by understanding regional farming needs and tailoring loan products accordingly. Banks can further facilitate farmers by offering accessibility in rural and remote areas through the establishment of sub-branches and agent banking outlets. Additionally, digitizing loan applications and processing, implementing automated credit scoring, providing flexible repayment terms aligned with farming cycles, and offering training on financial literacy can greatly enhance the effectiveness of agri-loans.

The various agri-loan schemes at our bank offer tiered loan products to address the specific needs of farmers. For small and medium farmers, these loans often feature moderate amounts with reasonable repayment terms, aligning with their operational scales. Innovatively, many programs now include microloans for landless farmers and sharecroppers. These microloans are supported by group lending models via microfinance institutions/NGOs, facilitating access to capital in the farthest corners of the country where formal banking is beyond reach.

Effective policy support from the government is crucial for streamlining the agri loan process. This includes enacting policies that incentivize financial institutions to provide more agricultural loans. Such support could come in the form of refinancing schemes dedicated to agriculture, offering low-cost funds that increase interest spreads for financiers, thus keeping interest rates lower for customers. Establishing a centralized registry for farming land and a farmer's database can also mitigate risks associated with lending to smallholder farmers. Policies aimed at improving rural infrastructure, like roads and electricity, will enable banks to reach the furthest corners of the country and directly enhance the success rate of these loans by boosting farmers' reach and agricultural productivity.