The FINANCIAL — For the first time in the history of the Georgian banking sector borrowers will be allowed to start repaying their credit up to five years after first receiving it. TBC Bank has introduced an agro-investment loan which is focused on further support of the Georgian agriculture sector. Loan amounts will vary from GEL 20,000 to USD 600,000.
TBC Bank and the Ministry of Agriculture of Georgia are offering agro-investment loans to citizens involved in agriculture. The new project has been implemented according to preferable agro-credit terms, and is aimed at the further development of the agriculture sector.
Agro-investment loans are being offered to farmers for the planting of perennial gardens. The sum of the credit will vary from GEL 20,000 to USD 600,000. Investment loan holders will benefit from the preferable terms of the loan.
“The product we have issued is unique and unprecedented in the history of the Georgian banking sector. Borrowers will be free from having to start repayment of a loan for up to five years,” said Vakhtang Butskhrikidze, CEO of TBC Bank.
Agriculture has become one of the prioritized sectors of development for the Georgian Government. Preferable agro-loans which involve crediting by commercial banks at the lowest terms have been one of the projects assisting the sector. TBC Bank has been actively involved in crediting the sector. The newly issued agro-investment loan is one of the latest projects of TBC Bank aimed at the financial support of the country’s agriculture sector. Since 2013 the loan portfolio of the Bank in this sector has already reached GEL 320 million. The number of borrowers reached over 8,000.
An agro-investment loan is affordable for physical and legal entities that own agricultural land of at least 1 hectare and are interested in developing perennial plantations. The loan will fully fund cultivation and subsequent maintenance of the gardens.
At the same time, farmers can benefit from the project initiated by the Ministry of Agriculture “Plant for the Future” in cooperation with TBC Bank. According to this programme farmers will receive as a grant a maximum of 70% of the cost of seedlings and 50% of an irrigation system.
“Providing collateral and preferential terms were the main concerns for farmers interested in applying for credit,” said Otar Danelia, Minister of Agriculture of Georgia, while talking about the importance of agro-investment loans and their unprecedented terms. The Minister expressed his desire that other commercial banks will follow the example of TBC Bank.
“Over 53% of citizens live in rural areas. Accordingly, such projects are very important,” said Danelia, adding that “access to financial resources is the main contributor to the development of the sector.”
“We realize that it was not easy for banks to increase their credit portfolio. However, the credit portfolio of commercial banks for the agriculture sector currently exceeds GEL 600 million. Accordingly, the project is working successfully. We would like to further increase accessibility to credits and a quality of freedom in terms of collateral. The main risk for the commercial sector is related to collateral. Accordingly, the Government is providing 50% of this project’s preferential agro-credit. The Government as well as private sector need more intensification and proactivity in this direction,” said Danelia.
According to the Minister, he still sees the importance of the Government’s role as a mediator between the representatives of the agriculture sector and commercial banks. Meanwhile, ongoing progresses in the sector make him optimistic that in several years’ time the Government will be able to leave this role as agriculture will have become more preferable for commercial banks for funding.
“The Government should eventually quit its role in the mediation process which it currently holds between the representatives of the agriculture sector and commercial banks. However, our mediation remains important for the time being. I think that in several years the market, including the land market (which during the last three years has increased four or five times), will develop so much that banks will consider it attractive to use as collateral,” Danelia told The FINANCIAL.
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