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Friday, May 2, 2025

ADB launches online banking

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20150212

In March, the Agri­cul­ture De­vel­op­ment Bank (ADB) will be launch­ing its on­line bank­ing ser­vice. Sheivan Ram­nath, CEO of the ADB, said this is just one of the moves that will trans­form the ADB in­to a mod­ern bank that is tech­no­log­i­cal­ly so­phis­ti­cat­ed and will meet the con­tem­po­rary needs of farm­ers and those in­volved in the agri­cul­ture sec­tor.

"We have just signed the Mem­o­ran­dum of Un­der­stand­ing (MOU) with iGovTT that will now see a trans­for­ma­tion in the ADB of the tech ser­vices and in­for­ma­tion net­work. Some of the things in this area we have em­barked on will be com­plet­ed in the next two to three months. The in­ter­nal test­ing for the on­line bank­ing is al­most com­plet­ed and we ex­pect a roll­out in ear­ly March," he told the Busi­ness Guardian on Mon­day.

Ram­nath said the agri­cul­tur­al bank will be pro­vid­ing its ser­vices 24 hours a day and it will be the bank that nev­er clos­es.

"You will have a link that brings you to the main bank­ing page. Cus­tomers can check their bal­ances, they can make pay­ments to their loans, move funds from one ac­count to an­oth­er and al­so re­quest state­ments. We are go­ing to brand this as the bank that nev­er clos­es," he said.

ADB chair­man Yasid Gilbert, who was al­so in the in­ter­view, said the vi­sion they have is to take some­one from be­ing on­ly a farmer to be­ing an agro-en­tre­pre­neur.

"There are some farm­ers that are more ad­vanced than oth­ers and what we want to do is at­tract younger peo­ple to this sec­tor through the use of tech­nol­o­gy. We want to move peo­ple away from think­ing this is a 19th cen­tu­ry bank to mod­ern de­vel­op­men­tal bank. I be­lieve it is the on­ly agro-de­vel­op­men­tal bank in the re­gion that is mov­ing in the di­rec­tion of e-bank­ing," he said.

Oth­er ini­tia­tives that the ADB has been pur­su­ing to make the bank more ef­fec­tive in­clude its risk man­age­ment frame­work, Gilbert said.

"We have done an in­ter­nal risk man­age­ment au­dit and we were on the verge of rolling out an en­ter­prise risk man­age­ment (ERM) plan as well as in­sti­tu­tion­al­is­ing a unit that will now speak to­wards the risk in the ADB. I an­tic­i­pate that will come on stream with­in the next two to three months. This will lend to in­crease cor­po­rate gov­er­nance and trans­paren­cy that is need­ed in a state en­ter­prise," he said.

Ram­nath and Gilbert spoke to the Busi­ness Guardian on Mon­day at the Hy­att Re­gency Ho­tel, Port-of-Spain.

In­ter­est rates

Gilbert said over the last three years the ADB has un­der­gone op­er­a­tional im­prove­ment.

"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 sub­ject­ed to mar­ket rates it would be high­er. I think in the com­mer­cial 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 $1.7 mil­lion.

Ram­nath said for fis­cal year 2013 to 2014, they were able to re­duce the size of the op­er­at­ing loss from the pre­vi­ous fis­cal year.

"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 ex­pen­di­ture 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" one.

"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 farm­ers.

"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.

Loans

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 mil­lion," 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," he said.

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 state­ments from 2012 to 2013 com­plet­ed and signed off," he said.

Ef­fi­cien­cy

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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 fi­nan­cial loss­es.

"Even with last year's loss, it was one of the bank's bet­ter per­for­mances in the last ten years. Pre­vi­ous loss­es were sig­nif­i­cant­ly 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-se­cure na­tion.

"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 sec­tor."


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