loan products of khan bank designed for agricultural sector, its complications and solving...

Loan products of KHAN bank designed for Agricultural sector, its complications

and solving possibilities

Dec 15, 2014

CONTENT

1. Agricultural sector – loan product type of KHAN bank

2. Overview of loans disbursed to Agricultural sector

3. Complicated issues and solving possibilities

To agricultural entrepreneur Micro loan

/Household expenditure and other

financial needs/ Working capital loan Investment loan Financial leasing

1ST PART

Special feature of the sector

1. Income – Usually cash income can be received during 6 months per annum.

2. Expense – Expenses are charged during 6months annually.

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Income Expense Cash balance

Special feature of the sector

3. Weather dependency – Too sensitive to drought, high risk

4. Special feature of the competitor – Poor limitation of the import

5. Knowledge and information of loan officers – Insufficient

6. Cash flow – Possibility to combine with deposit

Advantages Loan disbursement: Loan shall be disbursed partially in accordance with planting, fallowing, harvesting, storing and planned work performance.

“Loan disbursement and repayment schedule” shall be made relating to product sales of agricultural entrepreneur and providing possibility to repay with seasonal featured cash income.

For example: Loan repayment can be exempted for not more than 6months per annum.

Concessionary terms can be applied for placing and regular transmission through current/deposit account of the Bank.

Designed for herders

Property purchase loan Consumer loan Consumer leasing

Special feature of the sector

Weather dependency – migration with herds, if necessary

Cash flow – No regular income, expenses such as holiday, treatment, training etc are arising

Government organization’s dependency – Sometimes postpones loan disbursement

Advantages

Loan disbursement: Loan analysis is conducted on credibility and loan repayment capacity.

No demand to insure livestock, but emphasizes loan disbursement to herders with insurance.

“Loan disbursement and repayment schedule” shall be made relating to agricultural product sales and providing possibility to repay with seasonal featured cash income.

Guidance is delivered for each loan disbursement.

Demand

• Agricultural loan – during planting and harvesting,

• Herder loan – during Tsagaan sar, spring delivery, graduation ceremony, Naadam, autumn school gathering,

2ND PART

Total agricul-tural loan port-

folio 288,170,240

Agricultural loan portfolio

of KHAN Bank 118,712,615 or

41%

Total past due 18,959,775.9

Khan bank’s past due 970,751Or 5%

Agricultural loan portfolio as of Sep 30, 2014 /MNT thousand

Main complications in funding

Complications Fund term, expense

Lack of information

Insurance system

Other difficulties (collateral, guarantee, etc)

Possibility Project and program

development for herders and agricultural entrepreneurs by Government

Loan guarantee fund

International loan with concessionary terms

3RD PART

Thank you for your attention