Agricultural Development Bank Issuing ‘Krishi Rinpatra’ From Today
January 20, 2021 | Investopaper
Agriculture Development Bank (ADBL), which has played a leading role in the flow of agricultural credit, has started selling ‘agricultural bonds/debentures (Krishi Rinpatra)’ from Wednesday. Although the bank is preparing to issue a total of Rs 24 billion in bonds, it is about to sell only Rs 6 billion in the first phase. The sale of agricultural bonds has started about six months after the issuance of the monetary policy.
“Agriculture Development Bank will be developed as a leading bank in the agricultural sector,” the monetary policy states. “To facilitate the availability of long-term resources in the agricultural sector, the bank will be able to issue agricultural bonds.”
ADBL is preparing to sell bonds issued in the first phase to 27 commercial banks and Nepal Infrastructure Bank. For this, the bank will issue a circular to those banks. The interested bank will have to apply for the loan within the time specified in the circular. Securities Board of Nepal (SEBON) has allowed the bank to sell bonds by issuing information through circular method.
The bond issued in the first phase will be for seven years. The banks will receive 4 percent interest rate (coupon rate). The face value of the bond will be Rs. 1,000. Agriculture Development Bank had sought permission for the issuance of bonds worth a total of Rs 24 billion but has received only Rs 6 billion in the first phase. The bank plans to sell the remaining bonds in three phases. The maturity period of the second phase will be eight years, the third phase will be nine years and the fourth phase will be 10 years.
Banks that have purchased bonds/debenture from the Agriculture Development Bank can count it as their investment in agriculture sector.
NRB claims that this provision will mobilize additional financial resources in the agricultural sector and will help the banks and financial institutions to maintain the prescribed agricultural loan ratio through investment in agricultural bonds.
