RISK AND RISK MANAGEMENT OF RURAL AND AGRICULTURAL FINANCE
(MD. IBRAHIM KHOLILULLAH, DEPT OF AG.FINANCE, BAU
MOB: 01718996557)

INTRODUCTION
When discussing rural finance in Bangladesh, the foremost issue that merits mention is that loans to agriculture are generally offered only by specialized agricultural banks, since commercial banks and microfinance institutions largely refrain from financing the sector. There are many reasons for this, the most important of which is that this finance is strewn with risks, some of which the state is most likely to address. Hence, the governments hold ownership of these banks and their capital, and finance and support them.
Agricultural banks are exposed to the above two risks. These dual risks continually expose them to losses and bank ruptcy unless they have excellent risk management practices and/or are financially supported by the government. Some of the risks that the banks encounter are, inter alia: operational risks, market risks, credit risks, and inadequacy of capital. These interrelated banking risks are faced by all commercial banks, agricultural banks and governmental banks. They may be created as a result of inadequate fund allocation, weak labour regulations, mismanagement, an unsuitable operating environment, weak training programmes, bad credit transactions and price fluctuations.
Two problems must be mentioned in this regard: difficulty in measuring banking risks, and the lack of specialized management of most agricultural banks to monitor and measure them. It is difficult to precisely measure the banking risks for any particular agricultural bank in the region in order to know the specific risks and issues. Research and close scrutiny are the only means to achieve this, which need to be carried out by the departments themselves or the control systems in the concerned countries,
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