Agricultural Value Chain Finance - a Guide for Bankers : From Pilot to Launch
The Agricultural Value Chain Finance – A Guide for Bankers was developed by bankers for bankers. The Guide is a practical "how-to" toolkit, detailing the process of engaging in agricultural value chain finance.
AgriFin developed the Guide in partnership with HDFC Bank, India, HBL Bank, Pakistan, and Bankaool, Mexico. It provides:
- Practical, evidence-based guidance to financial institutions engaging in agricultural value chain finance (AVCF).
- Comprehensive picture of agricultural value chains to enable financial institutions to adapt financial products to the specific demands of value chain actors.
- Examples of field-tested AVCF products and procedures that have shown value or promise for financial institutions.
The AVCF Guide can be used by financial institutions' staff including senior management to understand the strategic benefits of value chain finance, heads of agricultural lending departments and their teams to implement value chain finance, other bank staff for training and self-study. The AVCF Guide is also useful for development professionals supporting agricultural finance projects.
This is Chapter 8: From Pilot to Launch.
The launch of a new VCF or the expansion of a piloted operation typically begins with an internal bank proposal to management. Such proposals differ among individual banks but there are several common characteristics. The examples of India’s HDFC Bank and Yapi Kredi of Turkey are illustrative of cases that have successfully established value chain finance operations in their existing markets and are actively seeking new opportunities. Additionally, management will need a number of internal tools for tracking the progress of value chain financing pilot initiatives, such as a value chain profit and loss template, to gauge progress before scaling up the new activities. Often a bank will undertake 2-3 loan cycles to examine the profitability of the model before scaling it up. Based on HDFC’s case in the dairy value chain, it can take 4-5 years before the project becomes ‘business as usual’ within the bank.
