1.00
ESTABLISHMENT
Rajshahi Krishi Unnayan Bank (RAKUB) was established by the President's
Ordinance No. 58 of 1986 with the aim of providing
institutional agricultural credit for optimum
utilization
of
agricultural potentials of
Rajshahi Division. Taking over all the 253
branches and other offices along with
assets and liabilities of the
Bangladesh Krishi Bank within
Rajshahi Division, RAKUB started
functioning on
15 March 1987.
2.00
FUNCTIONS
As the
largest development partner in the northwest region Rajshahi Krishi Unnayan Bank aims at overall development
of the farmers and all the sectors and sub-sectors
of agriculture in this region. Besides
catering to agricultural credit, financing agri-business and agro-based
industries, activities related to socio-economic development and poverty
alleviation programs, the bank performs most
commercial banking functions.
3.00
CAPITAL
Authorized
capital
of
Rajshahi
Krishi
Unnayan Bank amounted to Tk 1500.00
million, paid up capital Tk1500.00 million
and reserve Tk208.50 million as on
30 June
2005.
4.00
MANAGEMENT
A seven-member Board of Directors is
entrusted with the responsibility of policy
formulation for promotion of growth
in
agriculture leading to economic development
of the country through agricultural credit
support. The government appoints all
the directors of the board. An executive
committee constituted by the Chairman and
two other directors including the
Managing Director is there for
taking emergency decisions. The
Managing Director is the chief executive of the bank.
5.00
ORGANIZATIONAL STRUCTURE
The head office of the bank is stationed at
Rajshahi. The branch-network comprises
353 branches including one in Dhaka. One
General
manager's
office
at
Rangpur, eighteen zonal offices stationed in district
headquarters control branches under them.
There are 18 independent regional
audit offices under direct control of
the head office for conducting regular audit in branches as
well as in zonal offices. The bank has a
training institute at Rajshahi. Out
of total workforce of 3,524 officers
counted 1,570 and other staff 1,954
as on
30 June 2005.
6.00
NATIONAL ECONOMIC TREND
6.1 The world economy is projected to achieve a moderate expansion in 2005,
led by a robust growth in the United States and, in most emerging market and
developing countries, notably in China. The advanced economies as a group are
projected to grow by 2.5 percent, while the other emerging market and
developing countries as a group are projected to grow by 6.4 percent in 2005,
led by China.
6.2 During FY05, the Bangladesh economy was confronted with serious
challenges, among others, the impact of devastating floods, the excessive
price hike of oil and some other importables in the international market, in
addition to the termination of the Multi-Fiber Arrangement (MFA). To cope with
these challenges, the Government and the Bangladesh Bank adopted a series of
policies to enhance the resilience of the economy, while maintaining
macroeconomic stability. These policies significantly contributed toward
maintaining real GDP growth at a satisfactory level of 5.4 percent in FY05,
albeit lower than 6.3 percent of FY04. Economic growth was aided by continuing
rebound in exports, imports and remittances. In U.S. dollar terms export
earning recorded a growth of 14.7 percent while imports payments surged by
21.4 percent. At the same time, remittances from non-resident Bangladesh
nationals increased by 11.8 percent.
6.3 The 5.4 percent real GDP growth in FY05 was underpinned by improvements in
industrial production and services, reflecting expansion in both domestic and
external demand. On the supply side, industry and services sectors attained
higher rates of growth (8.6 in industries sector and 6.6 in services sector)
in FY05. Growth rate in agriculture sector, on the other hand, decelerated to
0.3 percent in FY05 from 4.1 percent of FY04, resulting mainly from a
significant reduction of output in crops and horticulture sub-sector due to
the adverse impact of floods. Annual average CPI (base FY96) inflation as of
end June 2005 was 6.5 percent, compared with 5.8 percent as of end June 2004.
6.4
The agriculture sector, mainly crops, was severely affected by the onset of
floods in FY05. As a result, crops and horticulture sub-sector registered a
negative growth of 3.3 percent in FY05 compared with a robust growth of 4.3
percent in FY04. Overall, output of food grains declined by 4.1 percent to
26.3 million ton in FY05, reflecting substantial production decline of Aus and
Aman crops. The devastating floods damaged the output of Aus (a relatively
minor crop). Aus output declined by about 18 percent to 1.5 million ton in
FY05 compared to the level of FY04. Due to dry spell prevailing during
harvesting time, Aman crop declined by 14.9 percent to 9.8 million ton, also
reflecting a decline of cultivation area. With a view to recovering loss of
crops, farmers gave relentless efforts along with timely seed distribution by
the government under post flood agricultural rehabilitation program and
channeling huge amount of crops loan; the output of Boro rice, the single
largest crop, increased by 6.7 percent to 13.7 million ton in FY05 from the
actual production of FY04. Wheat cultivation area experienced a fall as a
result of switching over to maize cultivation by the farmers. Despite initial
setbacks in the animal-farming sub-sector due to the floods, poultry
production recovered fast and registered a healthy growth in FY05. Forest and
related services sub-sector also recorded a marginally higher growth of 4.3
percent in FY05 compared to 4.2 percent in FY04. The fishing sub-sector
recorded 4.0 percent growth in FY05 compared to 3.1 percent growth in FY04.
6.5 In
the aftermath of the disaster, flow of agricultural credit disbursement was
strengthened, and program-based annual disbursement targets by the NCBs and
specialized banks were pursued during the year to ensure uninterrupted flow of
credit for the sector. The actual disbursement of Taka 49.57 billion against
the disbursement target of Taka 55.38 billion during FY05 was 22.46 percent
higher than the previous year’s total disbursement of Taka 40.48 billion. In
disbursement of agricultural and rural finance, two specialized banks viz. BKB
and RAKUB, four NCBs and BRDB played key roles. RAKUB and BRDB over performed
their disbursement targets by 12.26 percent and 2.63 percent respectively.
Disbursements of NCBs and BKB, on the other hand, fell short of targets by
33.02 percent and 5.00 percent respectively. About 68.45 percent of
disbursement was as short term lending and the rest 31.56 percent was in the
form of long-term loans for irrigation equipments, agricultural machinery,
livestock etc. The lion share of the short-term credit was disbursed for
production of crops and poverty alleviation programs constituting 62.13
percent and 35.13 percent respectively of total short-term loans.
6.6
Outstanding agricultural loan amounted to Tk 140.40 billion at the end of FY05
which is10.50 percent higher than that of FY04. Recovery of agricultural
credit during FY05 increased by 1.15 percent to Tk 31.71 billion from the
recovery made in FY04. Despite the decision to reschedule the overdue
agricultural loans of the borrowers in the flood-affected areas of the country
in FY04, the recovery position improved mainly due to serious recovery drive
taken by the banks and institutions. The incentive measures introduced
previously for recovery of stuck-up loans also continued in FY05 which, inter
alia, included persuasion through various types of fairs, negotiations, demand
notice, intensive supervision etc. The MIRACLE (maximum incentive for recovery
of classified loan entirely) policy of BKB, PARL (participation of all for
recovery of loan) and BUP (bottom up planning) strategies of RAKUB may have
contributed to modest improvement in recovery during FY05.
6.7
Attributed to steady growth of export income and remittance the country’s
foreign exchange reserve increased to US$ 2,930 million at end-June 2005
compared to US$ 2,705 million in 2004.
Performance of RAKUB:
2004-05
7.00RAKUB'S
PERSPECTIVEPLAN:2001-2010
Inspired with the success of the reform
program, the bank introduced in
1999-2000, the bank has launched a long-term
perspective plan on the basis of midterm
evaluation in 2001-2002. The new plan
aimed at offsetting accumulated loss and
earning real profit by the
culminating year 2010. The reforms
program aims at efficient loan portfolio management by prudent placement of
workforce and finding new catalysts. Effective
measures were taken for
implementation of the perspective plan, which included MBO (management by
objectives) for stimulating activities and
PARL (participation of all in
recovery of total loans) for
augmenting overall operational activities
in field offices as well as controlling offices. Aiming at
reducing classified loans and increasing performing asset
BUP (bottom up planning) strategy was adopted to ensure
involvement of all concerned starting from
the field staff in the branches to
the chief executive of the bank in
the head office. Other important aspects include efficient fund management,
enhancement of commercial banking activities, expanding branches network and
increasing manpower efficiency.
In order to counterbalancing shortfall in
annual income emanating from reduced rate
of interest on loans the bank enhanced loan
disbursement target for the year and reduced
interest rate on deposits. Steps were also
taken for reducing rate of classified loans,
improving income from commercial
banking, managing bank's property
efficiently and recovering dues. The year was declared as the "Year of
Customer Service Improvement:
2004-2005". The year has shown expected momentum in loan disbursement and
recovery and also recovery of substantial amount of classified loans.
Table 1: Position of
outstanding loan, classified loan and recovery of classified loan
|
|
|
|
|
Tk million |
|
FY |
Outstanding loan |
Classified
Loan |
Percentage Of
CL |
Recovery
of CL |
|
1998-99 |
11830.37 |
8408.60 |
71 |
250.10 |
|
1999-00 |
12135.33 |
7760.51 |
64 |
1071.48 |
|
2000-01 |
12944.35 |
7849.72 |
61 |
858.26 |
|
2001-02 |
14062.10 |
7614.80 |
54 |
1001.70 |
|
2002-03 |
15677,06 |
7465.03 |
48 |
1070.80 |
|
2003-04 |
17410.00 |
7302.00 |
42 |
1150.00 |
|
2004-05 |
20398.00 |
6425.00 |
31 |
1107.10 |
8.00 LOAN DISBURSEMENT
8.1
Against the lending target of Tk 8500.00
million for the financial year 2004-2005 the
bank disbursed Tk 8,697.00 million (102
percent of yearly target) among 340,633 borrowers.
Table 2: Sub-sector wise loan disbursement
|
|
|
(Tk million) |
|
Sub-sector |
2004-05 |
2003-04 |
|
Target |
Achieve
ment |
Borrowers |
Target |
Achieve
ment |
Borrowers |
|
Crops |
4800.00 |
4357.00 |
214951 |
4200.00 |
3742.80 |
196129 |
|
Fishery |
50.00 |
89.00 |
734 |
40.00 |
40.10 |
632 |
|
Livestock |
350.00 |
497.00 |
23119 |
300 .00 |
417.00 |
17634 |
|
Farm machinery |
60.00 |
71.00 |
785 |
80 00 |
44.60 |
748 |
|
Agro-based industries |
250.00 |
341.00 |
641 |
450. 00 |
160. 40 |
691 |
|
Cash Credit |
1400.00 |
1933.00 |
8329 |
850. 00 |
1368. 40 |
4809 |
|
Poverty Alleviation |
250.00 |
226.00 |
25718 |
180. 00 |
160. 50 |
13909 |
|
Others |
840.00 |
1183.00 |
66356 |
900. 00 |
833. 50 |
58116 |
|
Total |
8000.00 |
8697.00 |
340633 |
7000. 00 |
6767. 30 |
292668 |
8.2 Special Credit Programs
Consumers' Credit Scheme
The
bank has coined a new credit scheme entitled “Consumers’ Credit Scheme” for
the fixed income target group permanent staff of government agencies,
autonomous bodies and semi-government organizations. The aim of the scheme is
to empower them to purchase means of transportation, electronic gadgets and
furniture etc.for improvement of quality of life. Maximum credit limit under
the scheme has been fixed at Tk 300 thousand for vehicles, 100 thousand for
electronic gadgets and furniture. Rate of interest under the scheme is 12
percent per annum. Branch managers are delegated with the business power to
sanction the loans irrespective of amount. The loans are repayable in equal
monthly installments in four years. Tk 9 million has been disbursed among 109
borrowers up to 30-06-2005.
Credit
for Small Holding Tea Plantation
Tea plantation in Tentulia under Panchagarh district began just 3 years back.
RAKUB has been with the program since then. So far 21 companies including
Tetulia Tea Co. Ltd., Dahuk Tea Estate and Kazi & Kazi Tea Estate have already
made satisfactory progress in setting up tea gardens and processing units.
The bank has triggered a credit
program for the marginal and small farmers
for tea plantation in the area. An MOU has been signed between RAKUB and
Bangladesh Tea Board (BTB) for financing smallholdings tea plantation.
So far Tk 8 million has been
disbursed among
27 smallholdings and
a tea garden.
Potato Seeds Production
The
bank has been financing under the joint credit program to Contract Growers of
BADC for potato seeds production. Twelve branches of the bank spread over nine
zones disburse credit at 8 percent per annum under the program. BADC supplies
inputs like seeds, fertilizer, and pesticide to the farmers and provides
extension services. RAKUB, on the other hand ,provides crop hypothecation
credit at moderate terms. Harvest is collected from the farmers by BADC as
potato seeds and helps the bank recover the loans. An amount of Tk 7.12
million has been disbursed among 258 borrowers during the year under report.
Poverty Alleviation Credit Programs
The
bank has been disbursing micro-credit for poverty alleviation in the 16
northwestern districts since inception. Besides, the bank finances short-term
collateral-free credit under select individual or group-based programs for
income generating activities among poor and unemployed youths in compliance
with government policy.
The
bank has financed Tk 226.00 million as against of Tk 250.00 million annual
disbursement target in 11 poverty alleviation credit programs during the year
under report. Following are the bank’s poverty alleviation credit programs:
1)
RAKUB
self-help credit program (RSCP)
RSCP is RAKUB's own group-based credit
program introduced in 1994 in all the districts of Rajshahi division except
Kurigram. The bank
provides collateral-free small loans to poor and unemployed persons for income
generating activities under the program through 129 branches. Outstanding loan
under the project amounted to Tk 153.00 million on 30-06-2005.
2)
Marginal & Small Farm system crop
intensification project (MSFSCIP Kurigram)
The
project meant for Kurigram district aims at increasing productivity in farm as
well as off-farm activities, helping target group people achieve sustainable
development, resist the increasing trend of losing land under cultivation and
attain self-dependence. MSFSCIP, the ministry of agriculture assisted project,
was originally funded by IFAD and technically supported by German agency GTZ.
3)
Swanirvar credit program
The bank has been
implementing RAKUB-Swanirvar joint credit program since 1987 through its 71
branches in nine districts. The program finances Tk10,000 collateral-free
credit per group of poor borrowers at 10 percent per annum in such income
generating activities as food processing, tree-farming, fishery and livestock
farming. Outstanding loan as on 30-06-2005 amounted to Tk182 million.
4)
Shogorip (Food
grain go-down credit program)
RAKUB has been
implementing the program under Swiss government assistance since 1988 as
support to the sharecroppers and marginal and small farmers opportune, so that
they can sell their produces at favorable price. Sixteen warehouses are
managed in 16 districts under the program. Rate of interest under the program
is 11 percent. Outstanding loan as on 30-06-2005 amounted to five million
taka.
5)
UN Capital Development Fund (UNCDF)
credit program
Under the BSCIC
(Bangladesh Small & Cottage Industries Corporation) assisted program,
implemented by RAKUB since 1987 credit facilities are extended to
entrepreneurs of cottage industries for creating self-employment
opportunities. The program aims at economic development and uplifting the
craftsmen. Outstanding loan as on 30-06-2005 amounted to Tk 97 million.
6)
Women Entrerpreneurship Development
program (WEDP)
The BSCIC assisted
program implemented by RAKUB since 1987 aims at promoting cottage industries
and encouraging women entrepreneurship. Outstanding loan as on 30-06-2005
amounted to Tk 12 million.
7)
Pilot
Employment Generation Program (PEGP)
The BSCIC assisted
program aims at employment generation among rural poor women and women
artisans in selected areas. Outstanding loan as on 30-06-2005 amounted to Tk12
million.
8)
Semi-intensive
Goat-rearing Program
The
bank introduced the special credit program
of semi-intensive goat rearing for
poverty alleviation in 2002. The
program extends collateral-free credit up to Tk15,000
for one to four years' term at 10 percent per annum rate of interest. The
program envisages augmenting income
of the unemployed, meeting the demand
of protein and at the same time earning foreign exchange by exporting
goatskin. The bank disbursed Tk49.00 million under the program during
fiscal 2004-2005.
9)
Medicinal plants /orchids nursery
Rajshahi Krishi Unnayan Bank has launched a credit program for
entrepreneurs of
traditional Ayurvedic and Unani
medicine nursery of
medicinal plants, growing orchids and producing trees for fruits and timbers
with a view to making the
tree plantation program of
the government a
success and creating
self-employment opportunities for
the
less
educated and unemployed youths.
The bank provides credit of Tk 20,000 per
bigha (0.33 acre) and Tk 54,000 per
acre for nursery at eight percent per annum. An amount Tk 5 million has been
disbursed among 314 borrowers during the year under report.
10) Credit Program for
the Disabled Persons
RAKUB provides credit to
the disabled persons for alleviation of
poverty, creation of self-employment
opportunities and development of socio-economic condition. The bank extends
collateral-free credit up to Tk 50,000 for poultry,
duckery, goatery, dairy, beef
fattening, sewing machine, computer and
small trading. Tk 4.00 million has been disbursed
among 395 disabled persons up to
30-06-2005.
11) Zero Poverty Loan Scheme
The bank has initiated a
special group-based micro-credit program during the year under report entitled
"Zero-poverty Loan Scheme" for the extreme poverty stricken 23 upazilas in
greater Rangpur district. Poor people in the area pledge farm-labor at lower
price to landlords during lean season of August-September for borrowing money.
The program implemented through 65 branches is expected to restrain the
tendency and eradicate poverty in the region by providing up to Tk 3000
collateral-free credit repayable in 15 fortnightly installments to day-laborers
at only six percent interest rate. Male and female groups are formed
consisting of 6 to ten members. The members should be active, of the same
status and same occupation. For defaulted loans 8 percent interest is charged.
Outstanding loan as on 30-06-2005 amounted to Tk 33 million.
8.3
Agro-based Industries
The
northwest region is advantageously placed
for production of high-quality raw materials. To exploit potentials of
agro-based industries expansion in the
northwest region RAKUB has taken special scheme
to intensify financial support
in the sector.
The
bank
has taken pragmatic steps for attracting entrepreneurs for establishing
agro-based industries for preservation and processing of agricultural produces
in the region. The “entrepreneurs’ advisory cell”
in the head office provides advisory
services to the entrepreneurs. “Project Evaluation Committee” (PEC) evaluates the
projects before financing.
An
amount of Tk341 million was disbursed against targeted amount of Tk250 million
during fiscal 2004-2005 for setting up different types of industries.
Table
3: Select Agro-based Industries financed by
RAKUB during 2004-2005
|
Name of the project |
Purpose |
|
Siam Flower Mills Pvt. Ltd., Shibgonj, Chapai Nawabgonj |
Quality atta/flour production |
|
Shah Sultan Feed Mills, Gabtoli, Bogra |
Poultry and animal feed production |
|
Bengal Goat Breeding Farm, Santhia, Pabna |
Production of improved goat kids |
|
Baghabari Cattle Feed Pvt. Ltd., Shahzadpur, Sirajgonj |
Animal feed production
|
|
Jamuna Seeds Storage, Kalupara, Rajshahi |
Preservation of quality potato seeds |
8.4
Foreign Aided Projects
Small Enterprises Development Credit Project (SECP)
Small Enterprises
Development Credit
Project (SECP) has been launched under
Norwegian assistance to promote new small enterprises and
streamline existing ones in fifty upazilas
of greater Rajshahi, Bogra and Pabna
districts. The project, under
active supervision of the ministry of finance
aims
at
disbursement of security free credit starting
from Tk15,000 up to Tk75,000 during the
project period of five years. The
project is expected to create 68,000
new jobs through entrepreneurship development and income generating
activities. Twenty percent of total
credit will
be earmarked
for women entrepreneurs. The project
went into
operation
in fiscal
2002-2003.
Tk122.55 million has been disbursed under
the program to 4,054 trained
entrepreneurs till
30-06-2005.
North
West Crop Diversification Project (NCDP)
The
bank has undertaken a project named North-west Crop Diversification Project
(NCDP) under financial assistance of Asian Development Bank. The
project is under implementation
by
the Department
of Agricultural Extension
(DAE) under the Ministry of
Agriculture in sixty upazilas of sixteen
districts of Rajshahi division. The
project aims at production of high value
crops by small and marginal farmers and
expansion of agri-business. Four NGOs,
BRAC, PROSHIKA,
GKF & RDRS will
disburse
loans to small farmers’ groups for
high
value crops production and RAKUB will
disburse loan for agri-business development. Department of Agriculture
Extension (DAE) will arrange training to farmers for different crops. Credit
facility will be extended for high-value crop production to 160,000 trained
farmers of the project area. Tk 46.41 million has been disbursed to 10
entrepreneurs for development of agri-business till 30.06.05. While the NGOs
offered training to105,000 farmers and disbursed
credit of Tk 671.30 million for production
of high value crops.
8.5 Interest rate
In line with government policy the bank
lowered interest rate on loans and advances
twice during the last year to smarten up credit
flow in the agricultural sector. Interest rate on
loans and advances remained within eight to
ten percent during the year. The bank charged 6 percent, the lowest ever rate
for Zero Poverty Credit Program.
9.00
LOAN RECOVERY
9.1
The bank recovered Tk 6,829.30 million
during
the year as against target of Tk 7,000.00
million hitting 98 percent. Year's
loan recovery was up Tk 56.91 million
compared to the previous year.
9.2 Strategies followed during the year for recovering loans included:
earmarking loan recovery targets for zones at the outset of the fiscal,
evolving effective plans to achieve 100 percent of loan recovery target,
recovering loans already
classified and also those tending to be classified,
declassifying loans, rescheduling in demanding cases to widen the scope of
interest income, updating defaulters’ list, addressing all loan accounts
with no part repayment,
weekly and monthly progress monitoring, keeping in constant touch with "Top
Twenty" defaulters at branch and zonal
levels, achieving targets of writing off loans and recovering loans written
off earlier, intensifying awareness about "Artha Reen
Adalat Act 2003" and all out efforts to
prevent loan cases being barred by
law of limitation.
9.3
Financial incentives for recovery of CL & implementation of PARL
The
bank had to work out plans to buttress estimated deficit of interest income
in the wake of lowered rate.
Twenty-one
workshops participated by branch managers and field staffs were
held at zonal levels to find the way out.
Training programs for branch managers and field staff, loan
recovery camps, super
camps,
Reenmela, customers' gatherings
were also held. The managing director,
other executive officers and mobile
teams f
