Lending to state-owned enterprises

In addition to state-owned, cooperative and individual agricultural farms, Bank Rolny also provided services to state-owned agricultural and forestry enterprises such as e.g. agriculture mechanization enterprises (more than 450 enterprises), and general field construction and special-purpose construction enterprises. Those enterprises lines of business included performing tasks related to non-residential and residential construc- tion, drainage work, developing the electricity grid, and design work (a total of 600 enter- prises), and forestry and timber industry enterprises (more than 500 enterprises)50. In addition, BR conducted the sales of state-owned agricultural real properties51. BR s lending policy towards state-owned agricultural enterprises (PGR) changed in 1957 when the Bank introduced a new lending system for financing the operating activities of PGR. This was necessary due to changes in the economy and the organization of PGR. Those enterprises received greater independence, and they were now carrying out their settlements based on annual reports. In addition, changes were made to the planning system, the record-keeping system and the principles of financial economy. The financial system applicable to PGR mandated that PGR would be provided with own current funds at the level equal to 100% of value of cattle, pigs, fur animals and sheep, and 40% of value of horses52. PGR mostly used one type of general working capital loan. They used a special-purpose loan only in exceptional situations. BR introduced the new financing system also with respect to other state-owned enter- prises. It replaced the previous financing system which was excessively bureaucratized, formalized and based on administrative measures and methods. Under the new system, the economic nature of the banking loan was restored. The enterprise s management was affected through size and price of the loan, and significant restrictions were imposed, up to and including rejection and withdrawal of the loan53. The main assumptions of the system of extending loans to state-owned enterprises in Poland were as follows: business activity conducted based on economic settlements; enterprises must have their own current assets; cash management must be divided into operating and investing activity; ban on mutual lending among the enterprises and using bank loans to satisfy temporary needs; setting the current assets at the level equal to ongoing needs of the enterprise stipulated in its economic and financial plans54. Bank Rolny audited the enterprises by carrying out analyses of financial reports and by conducting direct audits in the enterprises.

50. Ibidem, p. 32 verso.

51. Ibidem.

52. Ibidem, p. 33 verso.

53. Ibidem, p. 34 verso.

54. Ibidem.

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