Myanmar Agriculture Development Bank (MADB) revised the farmers’ loan system from the group-based lending system to an individual based system, so that farmers can provide their own guarantees (Daw Khin Nan Myint, Deputy General Manager of MADB)

The Myanmar Agricultural Development Bank (MADB) will start disbursing loans on an individual basis, moving away from the current group-based lending system, “said Daw Khin Nan Myint, deputy general manager at the MADB. 

“Starting this year, we will extend loans to individual farmers. If a farmer successfully pays off his loans, he can apply for a fresh loan,” she told The Myanmar Times yesterday.

Under the new system, farmers will be able to provide their own guarantees. This will differ from the old system, under which the MADB provides loans to groups of three farmers who guarantee each other.  

The main issue is if two farmers in a group have paid off their loans, they are still unable to apply for fresh loans if the third farmer has not repaid his loan. 

“The problem is that if one farmer in a group is unable to repay his loan, the others hold off from repaying as well as they are worried that they will not be able to get loans again,” said Daw Khin Nan Myint. 

“The old system is complicated. Farmers are regularly in conflict with each other due to this system of lending. Changing to a system of paying loans individually should have been done much earlier,” said U Myint Thein, a farmer from Lewe township in Nay Pyi Taw.

Now, those who have completely repaid their loans will be permitted to receive new loans. “If, say, two out of a group of three have completely repaid their debts, they will be able to apply for fresh loans. If the remaining farmer wants to receive a new loan, he can get it after repaying his existing debt,” he added.

Currently, the MADB also disburses loans via a two-step system, under which it receives funds from the Myanma Economic Bank which is then extended to borrowers. 

Because of this two-step loan system, borrowers have experienced delays in receiving loans and high interest rates. 

Starting this month however, attempts will be made to lower interest rates at the MADB so that it is able to support the entire agriculture supply chain, Union Minister for Planning and Finance U Kyaw Win said in early April. 

The MADB, which was formerly under the Ministry of Agriculture, Livestock and Irrigation (MOALI), was moved under the remit of the Ministry of Planning and Finance (MOPF) last year.

Under MOALI, loans were given out to farmers at interest rates of 8 per cent per month. Since moving under the MOPF though, interest rates were reduced to 6.2pc, The Myanmar Times understands.

Currently, arrangements are being made for interest rates to be reduced further by involving private banks in the loan process, U Kyaw Win said.

(The Myanmar Times: https://www.mmtimes.com/news/madb-revises-loan-system-farmers-enabling-more-receive-funds.html )

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