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Agribank pursues quality in growing loan book

AGRIBANK is determined to pursue quality, while chasing growth in advances, to achieve optimal returns instead of volumes at the expense of prudence and shareholder value maximisation.

According to a statement issued by the bank’s public relations officer Fillemon Nangonya, the financial institution lends money to individuals, business entities or financial intermediaries for the promotion of agriculture and related activities.

The bank’s loan products cater for commercial farmers, communal farmers, women and the youth.

“To ensure prudent lending, the primary consideration in the assessment of any lending transaction is the borrower’s financial position and the ability to repay from their own and/or project sources.

“For some products, borrowers are required to provide collateral to protect the bank against the effects of unforeseen circumstances, but it should be noted that collateral is not a justification for lending, and neither is the lack of collateral a reason to decline a credit application,” Nangonya said.

He said the bank had been inundated with calls from clients wanting to know its criteria when awarding loans.

He said the bank, like all development finance institutions, assumes substantial risk in the natural pursuit of its business objectives.

As such, risk is an inherent part of its business and activities, he added.

“However, as a responsible lender, Agribank has a credit risk assessment framework within which it operates to assess credit on merits, on a consistent basis, and in a structured way,” he said.

He said from time to time, the bank reviews its risk appetite by setting credit limits, which are primarily premised on the percentage of exposure to the bank’s capital, single counterparty, group of connected counterparties, agriculture subsector and high-growth start-up projects.

Nangonya added that while credit risk is the major part of the bank’s overall risk to ensure the institution remains financially sustainable and is able to achieve its objectives, managing this risk takes precedence.

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