The first official agricultural finance institution of Iran was established in 1933. The institution, decades later called The Agricultural Cooperative Bank of Iran (ACBI), grew gradually providing funds for small and medium-scale agricultural activities in villages nationwide.
The Agricultural Development Bank of Iran (ADBI) was founded in 1969 in order to finance the large scale development projects in the agricultural sector. After the Islamic revolution, based on the "Banking Nationalization Law", the two afore-mentioned banks were merged to form "Bank Keshavarzi (Agriculture Bank of Iran)". Having access to specialized human resources and experiences of the two organizations gained during several decades of granting credit facilities to small and large projects, the bank was provided with new possibilities to render quality banking services to the rural population and the agriculture sector of the country.
BK began its operation as a state-owned financial entity supporting the agriculture sector with financial resources funded by the government, mostly in form of capital. Within the initial years of operations, the bank was less concerned over the mobilization of its financial resources and its basic performance was the distribution of resources supplied by the government. Within the 80s, BK obtained its required resources through the surplus of the commercial bank's resources or would borrow funds from the Central Bank. However, by the end of the 8-year imposed war and implementation of the first Five-year Development Plan (FYDP), credit activities of commercial banks had to finance other economic sectors and, thus, the bank encountered resources limitations to finance agricultural activities.
Challenges of dependency on government funds and commercial banks, excess demand for credit facilities with the lowest interest rate and economic liberalization movement in the banking system eventually led to changes in the bank's approach towards the agricultural financing. In early 1990s, BK started mobilization of public deposits and offering a variety of banking services rather than relying on other banks and the government's financial resources. Such an approach led to remarkable achievements in the bank's performance and most importantly, further support for the agriculture sector.
Within the period, the management focused on expansion of branches in rural areas and savings of the rural population. Thus, BK initiated a new stage of reforms, including restructuring and completion of branches' network, expansion of electronic-based banking operations and services, diversification of banking services and products, development of international banking operations, and enforcement of capital structure.
Such reforms and developments gradually transformed the bank from a credit and one-way fund into a "full-service bank", concentrating on the following principles aimed at accomplishing its mission and realization of its vision:
- Customer-oriented management and creating value for customers;
- Profitability and value creation for the bank's stake-holders;
- Financial discipline;
- Development of human capital;
- Financial self-reliance;
- Innovation and continuous improvement of services quality (creating competitive advantage)
The bank is now considered a pioneer bank in offering variety of banking services through its 1,914 branches nationwide, including 476 rural branches, 1182 urban branches, and 72 branches based in other organizations. For the past decade, the bank has been successful in meeting its objectives, especially financing the agriculture sector through active participation in monetary and financial markets and relying on adequate resources mobilization.
Chief among the fundamental and strategic objectives of the bank are as follows:
- Granting credit facilities to improve rural living standards
- Developing small industries in rural areas;
- Enhancing rural income levels;
- Boosting agricultural production;
- Strengthening the sector to reach self-sufficiency in production of agricultural crops and livestock products; and
- Escalating agricultural export.