Pran Dairy farmers to get collateral-free loans

Pran Dairy's contract farmers will get collateral-free low interest loans from Karmasangsthan Bank, a move intended to help boost the dairy sector and milk production. 

The farmers will be eligible for loans between Tk 1-5 lakh at an 11 percent interest rate.  

Once the farmers start earning from milk sales, Pran Dairy will collect the loans' repayment instalments from the earnings and deposit those with Karmasangsthan Bank, a state-owned specialised bank.

For example, a farmer borrowing Tk 1 lakh for two years will have to pay Tk 4,836 in monthly instalments. 

The leading dairy processor and the bank signed an agreement in Dhaka yesterday. 

“It is undoubtedly an innovative and praiseworthy initiative. Such a partnership will benefit the three parties involved, as well as the national economy,” Atiur Rahman, governor of Bangladesh Bank, said at the signing ceremony at Hotel Purbani. 

Karmasangsthan Bank will finance the dairy scheme out of a Tk 100 crore fund it borrowed from the central bank at 5 percent interest. 

The farmers can use the loans to buy cows, prepare sheds, buy cattle feed and carry out other farm-related development activities, said Uzma Chowdhury, director of corporate finance at Pran-RFL Group. 

Karmasangstan Bank will disburse loans among 100 dairy farmers based on their capability, under the first phase of the scheme, she said. Other dairy farmers will be added on at a later time, she said.   

More than 9,000 registered dairy farmers are rearing 16,000 cows at three Pran Dairy hubs in Natore, Pabna and Rangpur.

Pran Dairy currently has 123 milk collection and chilling centres where 1.5 lakh litres of liquid milk is collected a day, she added.  

Karmasangsthan Bank aims to serve the agricultural, small industry and other potential sectors through lending activities, said Obayed Ullah Al Masud, managing director of the bank. The bank will lend to the farmers as per Pran's recommendation, and the farmers will have 1 to 5 years to pay back the loans.