The Farmers Credit Line launched by Demerara Bank Limited was designed with the intention to cycle farmers’ income, aid in the prevention of a food crisis, and support the goals towards achieving food security.
The Bank’s Chief Executive Officer (CEO) Pravinchandra Dave at the launch on Monday said that given Guyana unique position in producing food, the bank took the bold decision to design a product that would be friendly and supporting to farmers’ initiatives.
Dave in his address said that having recognised the number of hurdles farmers face, they thought it was an opportunity to design a product that will eliminate the hassle.
The CEO explained that the bank’s analysis indicated that farmers were unable to make bold moves to set them in a better position.
With the launch of the scheme, he pointed out that farmers will not have to provide collateral and in applying for the line of credit they will have to provide a proof of address to open an account and once they have proof of no other debts the line of credit will be provided.
“We are not levying any charges, no commitment fees, no processing fees, no fees… there are no other hassles…” the bank’s CEO pointed out before explaining that one condition is that payment from proceeds must be made directly to the bank once the produce is sold.
“When we analyze the problems of the farmers there are [several]… First of all they don’t get credit from the bank… the next thing is the rate of interest charged to farmers were very high, third problem was the banks ask for the collateral and sometimes farmers don’t have the collateral.”
Meanwhile, Company Secretary Chandra Gajraj in her brief address stated that this new product offered by the bank will for now, focus on the rice producing sector. She stated that the bank thought it best to target this group since their bank branch network is situated in areas where 91% of rice is being cultivated in the country.
“We believe this product will be a game changer, with our experience it will provide structured financing of farmers cost and more efficient management of their business…We think we are poised to facilitate the need of our farmers.”
Noting that the importance of food security cannot be over emphasised and the commitment by regional leaders to reduce the Caribbean importation bill by 25% by 2025, is a target that is ambitious, Gajraj said that the bank stands ready to be a facilitator to help achieve the goal of a vibrant and sustainable agriculture sector in Guyana.
She underscored that the recently concluded Agri Investment Forum is testimony to the importance of food security in the region.
Dave stressed that with farmers being the backbone of society and facing many problems with production and accessing lines of credit, other banks should consider expanding their credit line to cater to their growing needs.
He noted that the culture of lending only to large-scale businesses must change as much of its deposits are coming from small persons.
“…We should be fair and judicious. We take deposits from the entire section of society and if we cater to the need of a few segments or individuals, in my personal view it is unfair, injudicious and I will call it discriminative,” he posited.
The CEO informed that Demerara Bank in its line of credit distributes 18% to the agriculture sector compared to the national share of 5%.
As such, he thinks that banks are not doing enough to propel the agriculture sector and looking at the position we are in, he believes they should reconsider how they distribute their line of credit.
According to Dave, bank credit in the last year went up from $261 billion to $291 billon, indicating a favourable 10% growth. At his bank they saw a more than 23% growth in their line of credit as it moved from $42 billion to $53 billion.
“The banker’s role is to be lending money to the people, generating economic activities, help them to boost their production and help them to improve risk. That is why we are here…”
President Irfaan Ali attended the launch on Monday at the Bank’s office in Mahaica. The Head of State, who delivered the feature address also assisted with the presentation of disbursement letters to 20 of the approved borrowers, a statement from the Office of the President said. This initiative will be launched in other areas across the country. To date, Demerara Bank has received 193 applications to the tune of $200 million.
