AIBB Agriculture & Microfinance 2025 WRITTEN Question Bank, Complete Solution & PDF

Case study-2 :

Contract farming and value chain financing :

Background : A Commercial Bank partnered with a food processing company and local tomato farmers in Natore Districts to support a contract farming model. Under the agreement :

(i) The bank disbursed input loans (Seeds, fertilizer, irrigation, training) to 200 farmers.
(ii) Loons were repaid post-harvest when tomatoes were sold to the processing company at a pre-agreed rate.

Financing structure :

-Loan size Tk. 20,000 per farmer..
-Interest rate 9% per annun.
-Repayment period 06 month
-Payment collected directly through the company.

Challenges :

-A few farmers diverted impute to non-contract crops.
-A local market offered higher price encouraging side-selling.

Outcome :

-Despite challenges, 92% of loans were recovered on time.
-The model helped farmers access quality inputs, technical support and assured market.
-The bank planned to scale up the model to other crops and districts.

Tasks to do :

(i) Draw a diagram illustrating the flow of goods, finance in this value chain.
(ii) Identify the roles of each actor in reducing credit risk.
(iii) Discuss the risk of side-selling and suggest solutions.
(iv) Calculate the total loan disbursed and estimate total interest income.
(v) Design a revised loan agreement that includes penalties for side-selling.

Case Study-1 :

Recovery of crop loan by Janata Bank in Mymensingh :
Back ground: Janata Bank disbursed Tk. 3 million in short term crop loans to 150 farmers for boro rice cultivation. The loan was given with a 9 months repayment period.

Problem :

(i) Unseasonal rain during harvest damaged crops, leading to low yields and income.
(ii) Only 55% of famers repaid in time.
(iii) Some farmers claimed loan waivers.

Recovery action taken :

(i) The bank formed a special recovery team.
(ii) Farmers were categorized into fully damaged, partially damaged and unaffected based on field visits.
(iii) The bank rescheduled loans for 40% of the affected farmers and provided grace periods.
(iv) Community were organized to educate farmers about credit discipline.

Outcome :

(i) Within four months Janata Bank recovered Tk. 2.7 million of the total loan amount.
(ii) The bank gained trust from local farmers and built stronger relationship.

Tasks to do :

(i) Identify the major internal and external factor that affects loan recovery.
(ii) Evaluate the effectiveness of bank's recovery's trategy.
(iii) Suggest additional strategy that could help improve recovery.
(iv) Calculate the recovery rate and identify the amount still outstanding.

TMSS, an MRA (Microcredit Regulatory Authority) approved NGO, gives a small loan of BDT 50,000.00 to a farmer. The tenure of the loan is one year. If annual interest rate is 24% (weekly interest rate is 0-46%) and if the farmer wants to make weekly repayment, how much must he repay as weekly installment?