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Factors Affecting Bkb Loan Repayment in a Selected Area of Mymensingh District

M. Kamruzzaman
Department of Agricultural Finance, Bangladesh Agricultural University, Mymensingh

B. B. Das
Department of Agricultural Finance, Bangladesh Agricultural University, Mymensingh

M. A. Bashar
Department of Agricultural Finance, Bangladesh Agricultural University, Mymensingh

Abstract/ Executive Summary:

The study undertaken to investigate into the repayment behavior of the BKB lonees situated at a rural branch of Mymensingh district reveals that relatively smaller farmers were more conscious about loan obligation to the BKB while the larger seemed to be reluctant to loan repayment on due time. Multiple regression applied for determining the factors affecting loan repayment performance indicates that the borrowers' age, land ownership, level of education and income positively could explain (73 percent) better loan payment. The study suggests for giving due importance to select experienced and educated farmers ad pptential higher income earning projects by the institutional sources of credit. It may also be suggested for adopting motivational services by the sources towards proper use of farm credit.

Keywords: Factors, Loan, Repayment, BKB

Location: Mymensingh

Start Date: 21-01-1997

End Date: 19-12-1998

Program Area: Socio-economic and Policy

Commodity:

Objectives:

(i) To assess the repayment performance of the BKB borrowers in the study area (ii) To identify the factors affecting repayment performance of the borrower farmers in the study area (iii) To suggest measures for improvements in the light of the findings.

Methodology:

Primary data have been used for the present study. The study area was Balikha union under Phulpur thana of Mymensingh district. The Phulpur thana is under the functional jurisdiction 0f BKB' Tarakanda branch. Seventy five loanee farmers from amongst a list of 177 loanees of the branch have been selected as respondent by using random sampling technique. The list of 177 loanee have been collected from the branch. Survey method was followed to collect information for the present study during 1993. Analytical technique: To assess the repayment behavior of the loanee-farmers regression technique was applied to determine the factors affecting loan repayment performance of the borrowers. The log-linear model which provided better results in terms of sign and significance of the parameters was accepted for interpretation. The specified log-linear model used is as follows: InY= ß₀+ß₁InX₁+ß₂InX₂+ß₃InX₃+ß₄InX₄+ß₅InX₅+ei. Where, Y = Amount (Tk.) of loan repaid by the loanee, X₁ = Age of the respondents, measured in years, X₂ = Borrowers owned land measured in ha, X₃ = Education of the respondents, measured in years of schooling, X₄ = Income (Tk.) of the respondent, X₅= Savings (Tk.) of the respondante, e = Random error term, ß_o-ß₅ are the parameters to be estimated

Source of Information: Bangladesh J. Agril. Sci. 28(1): 101-105, January, 2001

Article Link (Online Journal):

Funding Source:

Total Budget (Tk.) :

Achievement/Findings:

The repayment of farm credit received from the BKB shows that the average amount due for recovery was estimated to be Tk. 4099 of which Tk. 1963 have been repaid constituting 52 percent of the amount due for recovery during study year. Loan repayment by the small, medium and large farmers accounted for 48,66 and 33 percent, respectively The medium farmers were more conscious about their loan repayment in the study area. Large farmers were relatively reluctant about loan repayment in the area under study. The borrower's age, land owned, level of education and income have been found to positively influence the loan repayment behaviour of the farmers in the study area. The present study therefore, suggest for giving due importance to select experienced and educated farmers and relatively higher income earning projects extending loan by the institutional sources. The BKB should also render motivational services to its clients so as to make them more progressive to proper use of hard earned savings which in turn further improved repayment performance of the borrowers in the area concerned.

Knowledge Management: Journal