Islamic Republic of Iran: Bank Keshavarzi, the Agricultural Bank

This paper assesses the progress of Bank Keshavarzi (BK), Iran, from its inception in 1993. BK is a government owned agricultural bank with a twofold mission: acting as a development bank implementing government objectives and a commercial bank maximizing shareholder value.

Over the years, BK has transformed from a credit fund to a financial intermediary, with self-reliance, expansion of outreach and profitable operations as top priorities. Key reform processes include:

• Becoming a full-service bank;
• Making use of new opportunities for modernization of operations and services;
• Strengthening autonomy;
• Implementing strategic reform plans geared to good governance, efficiency and profitability;
• Taking first steps towards privatization;
• Getting rid of accumulated losses;
• Reforming corporate culture from a hierarchical structure into a flat organization;
• Diversifying portfolio to finance farm, off-farm and non-farm activities.

Priority projects that would help turn BK into a self-reliant, profitable universal bank with a wide outreach to rural as well as urban areas include:

• Policy dialogue towards sustainable Islamic banking;
• Banking with solidarity groups, focusing on educated young adults;
• Taking the bank to the people.