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Agricultural Credit and Customer Satisfaction: a Case Study on Dacope Branch of Bangladesh Krishi Bank

Md. Anisur Rahman
Hua Xiang Jute Products Co. Ltd., Mongla Export Processing Zone, Bagerhat 9351, Bangladesh

Nurun Naher Moni*
Economics Discipline, Khulna University, Khulna 9208, Bangladesh

Farjana Jerin
Economics Discipline, Khulna University, Khulna 9208, Bangladesh

Abstract/ Executive Summary:

This study measures performance of agricultural credit of Bangladesh Krishi Bank (Bangladesh Agricultural Bank) at Dacope upazila based on credit data for two years and measures customers’ satisfaction. Credit target, disbursement, recovery and outstanding loans have been examined to determine bank’s credit performance. Customer’s opinion and rating values are analyzed to depict their satisfaction by randomly selecting 40 customers of the branch. Overall credit performance such as credit disbursement, recovery and outstanding loan of the bank is poor during financial year 2013-2014 compared to financial year 2012-2013. The customers are all male, about half of them are doing banking for only five to ten years. The most important barrier for getting bank credit has been revealed as the availability of supporting documents for granting loans. The overall customer satisfaction is 3.36 on Likert scale which is closer to neutral level. The study concludes that the bank should improve the system of loan processing and relaxing collateral requirement as well as providing better services with target of new prospective customers

Keywords: Agricultural credit, Credit performance, Customer, Satisfaction.

Location: Dacope Branch of Bangladesh Krishi Bank

Start Date: 00-07-2014

End Date: 00-09-2014

Program Area: Socio-economic and Policy

Commodity: Credit, Satisfaction

Objectives:

This study analyzed disbursement and recovery of agricultural credit and customer satisfaction of BKB at Dacope, Southwest Bangladesh. ‘Agricultural credit’ is designated here as credit that is disbursed to the rural farmers for agricultural production and ‘satisfaction’ is designated as positive appraisal of bank by the customers.

Methodology:

The study was conducted during July-September, 2014 on 40 randomly selected male customers of the bank considering their banking during financial year 2012-2013 and 2013- 2014. During the research period, total number of loan client was 488. They took different types of loan namely crop loan, livestock loan, fisheries loan and farm and irrigation loan in varying amounts. Their banking relations with BKB started from one year to more than ten years. The socio-demographic information of customers was recorded through face-to-face interview. Information regarding their opinion and utilization of credit were collected and their level of satisfaction was measured. The Likert scale has five level grades such as ‘Strongly dissatisfied (SD)=1, Dissatisfied (D) =2, Neutral (N) =3, Satisfied (S) =4, Strongly satisfied (SS) =5’. Information on credit performance (i.e. target, disbursement, recovery and outstanding) was collected from documents presented at the bank. This study used face to face and semi-structured interview schedule with both open and close-ended questions were followed for collection of information.

Four criteria such as credit disbursement target, actual disbursement, recovery and outstanding loan were considered to decipher agricultural credit performance. The documented amount and their percentage changes (both positive and negative) have been used for analysis. The customer satisfaction was revealed through analysis of the following indicators pertaining to a customer. ? Duration of banking relationship with the bank ? Credit type and problems faced in getting credit ? Documents, collateral evidence and time required for a credit ? Rate of interest and service charges ? Quality of service ? Employee attitudes and bank environment ? Facilities and support ? Suggestions for improving the situation

Source of Information: Khulna University Studies Volume 13 (1) : 143-152 : January-June 2016

Article Link (Online Journal):

Funding Source:

Budget:

Total Budget (Tk.) :

Achievement/Findings:

BKB has been working for agricultural development in Dacope Upazila. The bank’s agricultural credit performance is poor in 2013-2014 compared to 2012-2013 in terms of credit disbursement, recovery and outstanding. Though documents and collateral requirements are treated as important barriers for bank credit, almost all customers (92%) suggested ‘having adequate collateral for loan’ is the best way of improving the credit recovery situation followed by close monitoring of loan as opined by 52.5% respondents and regular visit to customers by bank people according to 47.5% respondents. The overall customer satisfaction level is measured at 3.36 on Likert scale, which implies that customers are neither satisfied nor dissatisfied with the bank’s services. This finding leaves the room for policy makers of BKB to rationalize their services and attention towards customer oriented. The bank will be able to overcome its weaknesses and will bring enormous success by taking some major initiatives in the field of ease of loan processing, collateral requirement and better services with target of new prospective customers.

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