Home' Trinidad and Tobago Guardian : February 12th 2015 Contents FEBRUARY 2015 • WEEK TWO www.guardian.co.tt BUSINESS GUARDIAN
NEWS | BG5
"We are reviewing the policies within the bank. It was a
difficult period where the bank needed to sort out many
things," he said.
He said it is difficult to run a bank with a subsidised interest
rate compared to commercial banks.
"This has proven to be a challenge but not necessarily one
we cannot overcome. We are pegged at a three per cent and
five per cent range. In the backdrop of that, we are lending
to farmers and agro-entrepreneurs. It is difficult to manage
the operations within this range of interest rate. If it were sub-
jected to market rates it would be higher. I think in the com-
mercial banks it s around six to eight per cent and maybe as
high as nine," he said.
Gilbert said, according to unaudited statements between
2013 to 2014, the ADB incurred a small operational loss of
Ramnath said for fiscal year 2013 to 2014, they were able
to reduce the size of the operating loss from the previous fiscal
"What would have accounted for that is on the expense
side. Traditionally, the bank s expenses were higher than the
income it was able to generate because of the subsidised
interest rate. To combat that we have actually reduced expen-
diture by 25 per cent over the last financial year and that has
seen a reduction in the unaudited operating loss from roughly
$6 million to $1.7 million," he said.
He also said the bank has become more efficient in going
after bad debt.
"On the income side, we have become more aggressive with
collections and going after bad debt and making sure that the
loans we grant are viable and the chances of success are greater.
Our evaluation process is now more stringent, our follow up
process is also more stringent," he said.
He called the agriculture environment is a "highly risky"
"There is praedial larceny, diseases and flooding and other
unpredictable conditions. The sector that we lend to is not
one that the traditional commercial sector would have lent to
and the ADB was developed with the mandate of proving
affordable lending to farmers. The security requirements may
not be as stringent as what the commercial banks ask for with
regards to the terms of the loan. For example, we may give
a moratorium of up to six months to a year depending on the
type of project. If a farmer runs into flooding we offer skip
payments or refinance. Because of this, the risk the bank runs
is high," he said.
He said because of this high-risk environment, the ADB
has spent more time providing financial counseling to farm-
"What do you need to access a loan in terms of record
keeping. This has impacted on the quality of loans we have
been able to grant. We see it more as a financial advisory
service. The vision is to take it away from being a farmers
bank to transform the farmers into agro-entrepreneurs. We
want the farmers to see this as a career," he said.
Ramnath said during the last financial year, the ADB disbursed
almost $97 million in loans and this financial year the bank
has budgeted $140 million for loan disbursement.
"I am happy to say after the first four months we are on
target. In the first four months, we had budgeted to disburse
just over $40 million and so far, we have disbursed $40.7 mil-
lion," he said.
He said last year the ADB granted loans to 1,000 farmers.
"To manage the limited resources we have, we have to look
at the value of loans and spread the risk more. It is more
prudent to look at granting a larger number of small loans
rather than one large loan," he said.
Ramnath said the bank is also streamlining operations to
make itself more efficient.
"We want to cut expenses as much as possible, raise revenue
and we are now looking at other forms of raising revenue such
as management fees---like charges---we would have on the
loans. We have about 2,000 loans out there at the moment
and our customer base is just over 3,200. This year, we want
to build this base which would increase the number of loans,"
The volume of business coming from repeat customers is
about 67 per cent which he said is high.
"This means people who come to us are satisfied. If we are
able to find new markets, build our base and maintain this
67 per cent repeat business, it will put the bank on the path
of financial stability. We are seeing improvements and it will
take some time. Feedback from farmers is important in terms
of what they want," he said.
On the topic of audited statements, Ramnath said those are
being dealt with now.
"We have financial statements before the auditor general
from 2012 to 2013. The internal fieldwork has been completed
and we are now awaiting the auditor general to complete them
and sign off. We have now started working on the 2014
accounts. From an accountability and transparency issue, we
are fully prepared to put the information to the public. Before
the end of the first quarter of this year we should have state-
ments from 2012 to 2013 completed and signed off," he said.
Ramnath also referred to the limited subventions the bank
received from the State and their challenge in making it a
more efficient bank.
"This has affected us in that it has affected the pace in
which we grant the loans. The injection from the Government
is critical and is needed if we are to sustain the momentum
that we created in the first part of this year," he said.
He said the $1.7 million loss last fiscal year was still a much
better performance than previous years which saw even greater
"Even with last year s loss, it was one of the bank s better
performances in the last ten years. Previous losses were sig-
nificantly higher but this board has stabilised the performance
of the bank. We have managed expenditure by implementing
cost-cutting strategies resulting in a 25 per cent reduction in
expenditure. On the income side, we have gone aggressively
after the delinquent loans. Eventually we want to bring the
bank ot a break even position. The bank was not set up to
be a profit making institution but that does not mean the
bank cannot break even," he said.
Ramnath said all of this is geared to making T&T a food-
"Over the next two years, we will move from this stabilisation
stage to growth. The growth will be managed carefully so we
meet the mandate to the farmers and develop the agriculture
From Page 4
People who come to us are
satisfied. If we are able to
find new markets, build our
base and maintain this
67 per cent repeat business,
it will put the bank on the
path of financial stability.
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