NAYPYITAW — The Small and Medium Industrial Development Bank (SMIDB) will launch a trial scheme to provide collateral-free loans to vegetable farmers in the Naypyitaw Council area, Union Industry Minister U Khin Maung Cho announced on Tuesday.
The minister announced the plan at a ceremony to mark the approval of loans to operators of micro, small and medium-sized enterprises at SMIDB’s Naypyitaw branch.
The bank will lend the farmers 500,000 kyats per acre without requiring collateral. It is the first such scheme launched by the current government, U Khin Maung Cho said.
The bank selected 15 farmers in the village of Kin Pun Tan in Pyinmana Township to receive a total of 6,150,000 kyats. They farm a total of 12.30 acres.
The interest rate is 13 percent, as fixed by the Central Bank of Myanmar, and the repayment period is six months.
“The borrowers have to pay it back on time. If they fail to do so, we won’t lend them money again, and they will also face legal action,” the minister said.
Loan recipient U Tun Maung said, “The interest rate is OK for me. I’ll be able to repay it monthly, as I raise fast-growing crops,” he said.
The bank will provide loans not only to land owners, but also to tenant farmers who can show land rent documents.
The SMIDB has earmarked 60 billion kyats for loans to vegetable farmers in an effort to ensure domestic food sufficiency, said the bank’s chief executive officer, Dr. Zeya Nyunt.
“It is important that borrowers invest the loans in their businesses, and not elsewhere,” he said.
The loan scheme is a joint initiative between the Industry Ministry and SMIDB. The bank also provides loans to civil servants, offering up to five times their salaries at 1 percent interest.