Bold bank looks to farmers to deliver the goods

Hatton National Bank, in a bid to boost the agro-sector of the economy is taking a bold step by placing its faith or rather banking on the unlikely potential of rural farmers.

“We want to expose local farmers to the commercial aspects of farming through the financing of a study tour to India. Despite Sri Lanka being an agriculture based economy, this sector contributes only 16% to the GDP,” said C. P. Abeywickrema - Deputy General Manger of Hatton National Bank (HNB), at a press conference this week.

The bank being actively engaged in rural credit programmes for farming communities since its inception, will sponsor 12 farmers on a study tour commencing from November 12 -20, of four states in Tamil Nadu and two in Kerala. The tour is the third of its kind, to be sponsored by the bank, which will meet the full cost of airfare and accommodation.

The farmers while on tour are to gain an insight into successful agricultural practices in India, with the areas of focus being soil and water management; integrated farming; organic farming; tissue culture; post harvest handling and processing; commercial floriculture; dairy farming, etc.

“It is hoped that through this study tour the farmers, would be able to gain exposure to new technologies and techniques, and if brought back with them and implemented, then we feel we would have succeeded,” points out Vishwa Gunawardena - Manager, Development Banking, HNB.

The 12 farmers were chosen through the HNB branch networks of the four main districts, while considering their years of association with the banks as well as their involvement in farming societies and lending criteria.

“We chose leaders in farming societies so that they could take the experience gathered from the tour and implement them in their own communities. The first group of farmers who were sponsored in 1989 to China, really benefitted from the tour and we supported their initiatives to implement what they had learnt, so much so, that even today they are our best customers,” added Gunawardena speaking to The Sunday Times FT.

In a show of support to the rural agro - community needs, the bank grants loans to these farmers without the requirement of a security. Gunawardena said the loans vary according to the type of crops and the post harvest handling and processing needs of the farmers, where a typical short term crop loan could be given for as little as Rs.10,000 with no upper limit on these loans.

The interest rate for these loans is set at 9% with the repayment period for short term crop loans ranging from nine months to perennial loans that have a repayment period of five to ten years as in the case of crops like pineapple or banana.

He also added that in the eventuality that the farmers are faced with tough harvesting periods, the bank allows them a grace period of one to two years to pay back their loans, and during this time the farmer repays only the interest amount and not the capital.

To date HNB has been involved in over 10 rural refinance and non-refinance credit lines with financial services to develop the rural sector.Recruiting 120 field officers for their operations, the bank was also the first to recruit agricultural professionals to its main work force in order to develop their agro - credit programmes. Like Aninda Weerasinghe a young farmer from Nuwara Eliya who joined the bank in 1974 as a trainee clerk, but having initially worked with his father who was a farmer, decided to return to agriculture and has been with the bank for 15 years, and even succeeded in purchasing his first tractor through the bank.

“When 60% of the entire banking sector is focused in the western province, we’ve been the only private sector commercial bank to go into the rural areas. We’ve done this with a strong commitment to developing the rural agricultural sector and by developing this sector, it could expand and venture into new areas,” said Abeywickrema. “The farmers are the true leaders and we know if we support them, this is where revenue could come into the country. We are not expecting a return for the bank but for the farmers.”