Four state-owned banks that have similar business scopes will be merged to help provide more loans for micro, small and medium enterprises (MSMEs) and farmers and to do so will ask advice from the World Bank according to Union Minister of Planning, Finance and Industry U Soe Win during a workshop on financial support MSMEs on 22nd January in Nay Pyi Taw.
Among Myanma Economic Bank, Myanma Foreign Trade Bank, Myanmar Foreign Investment Bank and Myanmar Agricultural Development Bank, Myanma Economic Bank and Myanmar Agricultural Bank will be merged first in order to modernize a loss-making lending scheme that involved one-year loans at reduced interest rates to farmers.
“We’d like to create loans that are more flexible for farmers so they can freely grow any crop they like, except poppy. The idea is to issue loans based on the crops they grow,” explained U Soe Win.
Another effort to modernize lending in the agricultural sector is the formation of credit guarantee corporation (CGC) spearheaded by the Central Bank of Myanmar. It would help spread the burden of risk for farmers and business owners who cannot put up collateral but it will take two to three years to establish a CGC in Myanmar, said U Soe Win.
“I tried to buy a combine harvester through a bank loan last October but it wasn’t successful because the purchase needed so much collateral as well as financial statements. It’d be very convenient if there is an intermediary organization like a CGC. I hope they form the organization as soon as possible,” said Ko Myo Lin Aung, a farmer from Pyinmana Township.
Source: The Myanmar Times