Kazakhstan: Bankers are in silks, farmers are head and ears in debts

The society has always had a very negative attitude to usury. To lend money at interest is neither more nor less than a parasitism on someone else’s work. In Islam, there is a ban on lending rate not by accident.

Someone may object, noting that in modern economic paradigm, banks serve as the drivers of development, when lending to business. They say, money is blood of production, and if there are no “donors”, the “patient” may die without injection. In fact, very often it is not so, and banks cannot support, but on the contrary, destroy the project, having driven it into debt.

Of course, loans are different. It is one thing, when the creditor participates in a process as a partner. That is, he equally shares with the borrower not only profit, but also all business risks. There are such examples, but they are very rare.

Unfortunately, to date, the situation is opposite in most cases. Commercial banks act as parasites in relation to business. That is, it does not matter for them what is going on with a “body” – they will get theirs by all means. In extreme cases, they will gnaw a “corpse”, because money has no smell.

Whether it is possible to consider this situation normal? Of course, not. Once there is no partnership between the creditor and the borrower, the bank is not interested in the final result. There is no incentive to worry about success of the business project. After all, if something happens, it is possible to sell collateral and even with additional benefit for it as all pledges are assessed at the lowest quotations.

On an economy scale such distortion leads to the situation when only the financial sector feels confidently. Banks always benefit, and industry and agriculture teeter on the brink of survival, counting every penny to pay off debts. Given that banks often serve as operators of state programs, distributing budgetary funds, such approach to expenditure of national resources looks very doubtful. After all, only bankers benefit and honest sloggers are often left back at the bottom of the ladder just because the creditor is not going to share risks with them.

The staff reporter of the IA “Kazakh-Zerno” decided to illustrate this fact with a real example.

Before the start of the growing season LLP “Zheleznoye” engaged in the cultivation of grain crops in the North-Kazakhstan region, tried to get a loan for current expenses for spring sowing and fall harvesting campaigns.

However, farmers quickly realized that it will not be easy to do so. As already stated, the banks have built a policy so that they must be insured against all risks for 100 per cent (or even more). Therefore, the loans are issued only on the security of highly liquid assets.

Yes, farmers have some property. For example, real estate in the village, but banks refuse to accept it as collateral – because if something happens bankers don’t want to bother with sale of objects that are located far from the city.  

Strange situation, is not it? Agriculture, one of the priority directions of development of national economy, has no access to bank crediting because of a whim of bankers! What kind of development can be discussed in such conditions? Largely because of this, our country is not able to provide meat, vegetables and other food for itself! The concern of availability of bank loans to farmers is brought by landowners many years, but business doesn’t go further than talks.

Somehow the situation is saved by credit structures of “Kazagro” holding.

– I want to tell many thanks to the President of Kazakhstan Nursultan Nazarbayev for his support of peasants, – said the representative of “Zheleznoye” LLP. – On his initiative, we receive the help from structures of “KazAgro” holding and from local budgets. Mainly, these are subsidies. It is great support for us. Subsidies partially compensate our expenses on seeds, fertilizers, diesel fuel and for leasing of equipment. Without this the agriculture of the country would cease to exist long ago.

But, unfortunately, resources of “KazAgro” and regional budgets are not unlimited. They cannot fully cover needs of the peasants for financing.

Here, “Zheleznoye” LLP turned out to be in a difficult situation as well – money was necessary before the agricultural season, but there was no pledge for receiving the credit. They began to seek a way out, because it was necessary to hold a sowing campaign anyway.

Eventually they came to such kind of a decision: the company located in Petropavlovsk and cooperating with “Zheleznoye” LLP in respect of grain purchases for a long time, decided to take out a loan for itself and to give this money to farmers for carrying out field works. They worked out everything and decided that will be able to wipe off debts in the fall.

Новость на Казах-зерно:The credit was obtained in the North Kazakhstan branch of “Halyk Bank of Kazakhstan”. Money was spent on purchase of fuel, fertilizers, seeds and to cover other operating costs.

However, as we know, last year was rather difficult for farmers. Landowners unanimously say that they cannot memorize such a damp fall and such an early arrival of cold weather in all their born days. In this regard, expenses on harvesting campaign grew, and the income was lower, than it was expected before.

– Moisture of grain reached 30%! – said the representative of “Zheleznoye” LLP. – As a result, in order to bring it up to standard, we had to drive it through the dryer twice. And these are huge additional costs that we could not predict earlier. Moreover, grain quality was lower than we expected. And that means that we had to sell it cheaper.

In short, the company from the North Kazakhstan failed to pay in the fall; it paid to the bank only a loan fee in the amount of 16 million tenge. Payment of principal was postponed to the beginning of this year – for reasons beyond control.

However, the bank did not accept any arguments. A penalty of about 10 million tenge was accrued for a delay. Grain traders wrote a letter to NKRB of “Halyk Bank of Kazakhstan” JSC (Director – Temirgali Mayekenov) requesting to show understanding and cancel the accrued penalties, at least partially. However, bankers refused: problems of farmers did not attract any sympathy from the financiers…

– Although we have repeatedly addressed to “Halyk Bank” with a request to at least partially write off some part of the fine, we got only the denial – says the representative of the company. – Director of the bank in an interview expressed something a la that he does not care about other people’s problems. He said that he had his own staff and it was necessary to pay a premium to everyone. A cash bonus, you know?! Though, at the same time we learned from our workmates-villagers also affected by bad weather that the other banks in our region, having shown understanding to farmers, not only wrote off penalties on compelled delays, but even reduced an interest rate for the credit whenever possible! These are “Kazkom”, “BTA”, and others. But our “Halyk bank”, despite its significant title, did not begin to think about the people.

What was we supposed to do? We had only to break down the entire financial stability of the company, to pull out the money necessary for the development and operation and to give it to bankers.

As a result, the borrower paid all the money to the bank in the middle of January; the debt was paid off in full, including the principal amount, and penalties. But at what price? Following the results of the year, “Zheleznoye” LLP turned out to be far in the red. A difficult year for the farmers has brought only problems. Moreover, the work with the bank, as it became clear at the end of the year, has only exacerbated these problems – financial health of the enterprise was much better before receipt of a credit than after paying off to bankers their credit, interest and penalties.

– It turns out all this year we have worked to ensure that the bankers would get their cash bonuses! – said the representative of “Zheleznoye” LLP .- The Bank got a double profit from us at the year-end – and the interest on the loan, and penalties. And we are left with a hole in our pocket and we do not know how to patch it now. Spring is nearing, and prospects are bleak. And we have a question: in 2008-2009 when there was a crisis, the state has sent billions of tenge to support banks. Public funds! And when we, farmers, found ourselves in a difficult situation, banks remained indifferent to our request for the slightest derogations.

Due to such а “cooperation” with “Halyk bank” “Zheleznoye” LLP not strengthened its business and regained its feet firmly, nor bent even lower to the ground. Whether such a banking system and such “antinational” banks should pour in blood into the economy of the country?

Now farmers of “Zheleznoye” LLP can only hope that there will be people willing to work really in partnership with them, sharing the burden of risky plough tail, and not just lend money at a guaranteed interest in order to take them by the throat at a difficult moment later.


Akyn Aulov


Rate article
Kazakhzerno
Add a comment