Armenia—Technical Assistance for MSE Agri-Lending Products for Araratbank

Araratbank in Armenia is a privately owned commercial bank that provides a range of services to corporate and retail customers and small businesses, with micro, small, and medium-sized companies (MSMEs) as its main clientele. The European Bank for Reconstruction and Development (EBRD) extended a $7 million equivalent credit line to Araratbank to support further development of on-lending to local MSMEs. At least $1 million was allocated for lending to local agribusinesses. This is a relatively new segment for Aratatbank; we assisted in designing sustainable lending schemes suitable for this sector.

Sample Activities

• Define agribusiness segments from which Araratbank could build new clientele.
• Develop lending schemes for small farmers taking into account specific features of the agricultural business.
• Develop an agri-lending scorecard to assess risks and monitor credit quality given seasonality and inherent risks; formulate credit policy.
• Design the product line.
• Implement lending schemes to finance agribusiness in one to two pilot branches.
• Create an agricultural database to develop the bank’s agribusiness experience and knowledge database to keep abreast of innovations in the farming sector.
• Train loan officers in business plan analysis and nonfinancial analysis of micro and small agriculural entities.