Loan products of KHAN bank designed for Agricultural sector, its complications
and solving possibilities
Dec 15, 2014
CONTENT
1. Agricultural sector – loan product type of KHAN bank
2. Overview of loans disbursed to Agricultural sector
3. Complicated issues and solving possibilities
To agricultural entrepreneur Micro loan
/Household expenditure and other
financial needs/ Working capital loan Investment loan Financial leasing
1ST PART
Special feature of the sector
1. Income – Usually cash income can be received during 6 months per annum.
2. Expense – Expenses are charged during 6months annually.
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Income Expense Cash balance
Special feature of the sector
3. Weather dependency – Too sensitive to drought, high risk
4. Special feature of the competitor – Poor limitation of the import
5. Knowledge and information of loan officers – Insufficient
6. Cash flow – Possibility to combine with deposit
Advantages Loan disbursement: Loan shall be disbursed partially in accordance with planting, fallowing, harvesting, storing and planned work performance.
“Loan disbursement and repayment schedule” shall be made relating to product sales of agricultural entrepreneur and providing possibility to repay with seasonal featured cash income.
For example: Loan repayment can be exempted for not more than 6months per annum.
Concessionary terms can be applied for placing and regular transmission through current/deposit account of the Bank.
Special feature of the sector
Weather dependency – migration with herds, if necessary
Cash flow – No regular income, expenses such as holiday, treatment, training etc are arising
Government organization’s dependency – Sometimes postpones loan disbursement
Advantages
Loan disbursement: Loan analysis is conducted on credibility and loan repayment capacity.
No demand to insure livestock, but emphasizes loan disbursement to herders with insurance.
“Loan disbursement and repayment schedule” shall be made relating to agricultural product sales and providing possibility to repay with seasonal featured cash income.
Guidance is delivered for each loan disbursement.
Demand
• Agricultural loan – during planting and harvesting,
• Herder loan – during Tsagaan sar, spring delivery, graduation ceremony, Naadam, autumn school gathering,
2ND PART
Total agricul-tural loan port-
folio 288,170,240
Agricultural loan portfolio
of KHAN Bank 118,712,615 or
41%
Total past due 18,959,775.9
Khan bank’s past due 970,751Or 5%
Agricultural loan portfolio as of Sep 30, 2014 /MNT thousand
Main complications in funding
Complications Fund term, expense
Lack of information
Insurance system
Other difficulties (collateral, guarantee, etc)
Possibility Project and program
development for herders and agricultural entrepreneurs by Government
Loan guarantee fund
International loan with concessionary terms
3RD PART