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Agribank pursues quality whilst chasing growth in advances

Agribank pursues quality whilst chasing growth in advances

By Clifton Movirongo.

Agricultural lender, Agribank, recently revealed plans to pursue quality whilst chasing growth in advances to achieve optimal returns rather than the pursuit of volumes at the expense of prudence and increased shareholder risk.

The bank said its 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 projected sources. The bank also said the reason for this is to ensure prudent lending.

“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,” the bank said.

Agribank promotes agriculture and related activities by lending money to individuals, business entities, or financial intermediaries.

A statement issued by the Public Relations Officer of Agribank, Fillemon Nangonya, warned that the Bank, like all development finance institutions, assumes substantial risk in the natural pursuit of its business objectives. He added that, as such, the risk is an inherent part of its business and activities.

He, however, said that as a responsible lender, Agribank has a credit risk assessment framework within which it operates to enable the Bank to assess credit on merits, consistently, and in a structured way.

“Additionally, the Bank reviews its risk appetite by setting credit limits. The limits are primarily premised on the percentage of exposure to the Bank’s capital, single counterparty, group of connected counterparties, agricultural sub-sector, and high-growth start-up projects,” the Bank’s spokesperson explained on Tuesday.

He added that: “Thus, credit risk becomes the major part of the Bank’s overall risk and in ensuring that the institution remains financially sustainable, and is, therefore, able to achieve its objectives, managing this risk takes precedence.”

“Lastly, the Bank will continue to shape the future in the best interests of the societies, farming communities, and stakeholders, while safeguarding its financial sustainability,” Nangonya said.


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