Bank Of Agric Non-Performing Loans Rise To N20bn | Independent Newspapers Limited
Newsletter subscribe

Agribusiness

Bank Of Agric Non-Performing Loans Rise To N20bn

Posted: Aug 11, 2016 at 3:56 pm   /   by   /   comments (0)

The non-performing loans of the Bank of Agriculture (BoA) have risen to over N20 billion, according to Professor Danbala Danju, Managing Director/Chief Executive Officer of the bank.

Speaking at the ‘Back to Agriculture Conference’ organised by the Centre for Values in Leadership in Lagos recently, Danju said the bank disbursed a total of N38.9 billion from 2010 to end of 2015 out of which N20 billion are non-performing.

He said the bank’s current lending capacity is inadequate to meet demand, lamenting, however, that some of its loan beneficiaries have refused to repay as they see the bank services as part of the national cake.

He stressed that the bank has been reaching out to beneficiaries via advertising and direct mailing for them to come and pay back their loans, noting that BoA like any other bank could only survive if people take credit and pay back.

Danju noted that BoA’s loan disbursement has reduced steadily in recent years from N7.2 billion in 2010 to N3.2 billion in 2011, N3.7 billion in 2012. Disbursement, however, moved up marginally in 2013 to N5.6 billion, N6.7 billion in 2014 and N7.5 billion in 2015.

He explained that the marginal increase in 2014-2015 was due to the intervention fund granted the bank by the Federal Government, adding that the bank requires about N250 billion each year to fully meet demand for its services.

Danju revealed that the non-payment of its credit necessitated the bank introducing other mechanisms to identify real farmers, as many of the farmers that came to the bank in the past were not real farmers.

“We introduced this mechanism first of all to make sure that we identify farmers. Some who came to us in the past were not farmers, now we have developed mechanism like the Bank Verification Number to ensure that we know who we are dealing with.

“We are taking a step further to ensure that if you say you have one or two hectares, we need to verify the authenticity of your claim by using Global Positioning System (GPS) so that we take your biometrics, we also have the exact location of your farm,” he said.

He explained that information obtained would then be keyed into a data bank through which information is sent to applicants and necessary data obtained from them.

“We send you information and receive information from you on when you plant, when you reap, what kind of fertiliser you need, what kind of market you need, in such that we have a clue of what will be your harvest. We also know what profit you are able to make, we know what kind of support you need whether you need to restructure your credit or otherwise, we will be able to reduce loan default,” he said.

He added: “We have just started and some of the institutional restructuring that we are undertaking will of course take additional seven or eight more months before we put in place the structure, but we are determined to modernize the Bank of Agriculture.”

Speaking on the bank’s support for intervention funds, he stated that the bank managed the Federal Government’s N3.6 billion Mechanisation Fund, N2.4 billion Cassava Bread Initiative as well as the N15 billion intervention funds for agriculture out of which N7.5 billion has been released to date since 2014.

 

Seyi Taiwo-Oguntuase Lagos