A senior official has announced that four government-owned banks that have similar business scopes will be merged in order to help provide more loans for micro, small and medium enterprises (MSME), and farmers. They will combine the banks that currently serve similar purposes and to do so they will seek advice from the World Bank.

The exercise will involve Myanma Economic Bank, Myanma Foreign Trade Bank, Myanmar Foreign Investment Bank, and Myanmar Agricultural Development Bank. The plan is to first merge Myanma Economic Bank and Myanmar Agricultural Bank in order to modernise a loss-making lending scheme that involved one-year loans at reduced interest rates to farmers.The idea is to issue loans based on the crops they grow, adding that a similar loan system had proven Successful in Thailand.Bankers from Thailand were invited to the workshop to share their experience and methods.

Another effort to modernise lending in the agricultural sector is the formation of credit guarantee corporation (CGC) spearheaded by the Central Bank of Myanmar.Such an entity would help spread the burden of risk for farmers and business owners who cannot put up collateral.They 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 organisation like a CGC.

Source: Myanmar Times

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