MADB to stick with group-loan struc­ture

The Myanmar Times - - Business - SWAN YE HTUT swanye­htut@mm­times.com – Trans­la­tion by Thiri Min Htun

MYAN­MAR Agri­cul­tural De­vel­op­ment Bank (MADB) will con­tinue to dis­perse loans us­ing a group-pledge sys­tem rather than al­low­ing in­di­vid­ual farm­ers to be re­spon­si­ble for the risk, the deputy min­is­ter for agri­cul­ture told par­lia­ment.

Deputy Min­is­ter U Tun Win was re­spond­ing to a ques­tion from Daw Ei Ei Py­one (NLD; Aye­yarwady 8), who asked on Oc­to­ber 3 whether there were plans to ex­tend loans to in­di­vid­ual farm­ers.

MADB em­ploys a group-pledge sys­tem, where if one farmer fails to pay his or her share of the group loan, the oth­ers are re­spon­si­ble for cov­er­ing the short­fall. In the past, 10 farm­ers had to group to­gether to ap­ply for loans, al­though this year farm­ers can ap­ply in groups of three, an of­fi­cial from the Min­istry of Agri­cul­ture, Live­stock and Ir­ri­ga­tion pre­vi­ously told The Myan­mar Times.

But if one farmer lets a group down, that group can then strug­gle to take out new loans, Daw Ei Ei Py­one told the Amyotha Hlut­taw ses­sion.

‘To pre­vent the state los­ing rev­enue we have to dis­burse loans us­ing col­lec­tive re­spon­si­bil­ity .’

U Tun Win Deputy min­is­ter for agri­cul­ture

“So, I’d like to know if there is a plan to dis­burse agri­cul­tural loans un­der an in­di­vid­ual re­spon­si­bil­ity sys­tem,” she said, re­fer­ring to the 2017-18 fi­nan­cial year.

The deputy min­is­ter said that farm­ers had to form their loan ap­pli­ca­tion groups with peo­ple who would be ac­count­able for their debts. When is­su­ing new loans, pri­or­ity would be given to groups that had re­paid ex­ist­ing debt on time, he said.

“If farm­ers de­fault on their loans, they shall be pun­ished ac­cord­ing to the law,” he said. “But the state still loses rev­enue. To pre­vent los­ing state rev­enue, we have to dis­burse loans us­ing a col­lec­tive re­spon­si­bil­ity sys­tem rather than tak­ing col­lat­eral [from in­di­vid­ual lenders].”

MADB is the only af­ford­able source of finance for Myan­mar’s farm­ing house­holds and strug­gles to stay prof­itable. The bank re­lies on loans from fel­low state-owned en­ter­prise Myan­mar Eco­nomic Bank (MEB) and the coun­try’s Cen­tral Bank. But it re­lies on farm­ers pay­ing back loans in or­der to meet it owns debts.

The gov­ern­ment re­cently an­nounced it would place MADB un­der the finance min­istry’s control, and plans to cor­po­ra­tise the bank as part of a re­form process.

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