Lending to production cooperatives

Production cooperatives could use Bank Rolny s working capital loans with maturity of up to 18 months for production outlays in the following forms: current account overdraft which constituted an ongoing supplementation of cooperative s own funds; one-off loans granted for cooperative s specific purposes as temporary supplementation of own funds held for that purpose. The second type of working capital loan had a maturity of up to four years with grace period of up to two years for production outlays incurred over the course of several years. Next, Bank Rolny extended investment loans to the cooperatives for the following purposes: activity related to conducting and expanding an agricultural farm; lease and startup of small agricultural products processing plants; purchases, con- struction and startup of small manufacturing plants producing construction materials for construction purposes and for members of production cooperatives. Those loans were extended for the term of 30 years with optional grace period of up to six years55. In addition, production cooperatives took advantage of various forms of special state assistance. One of them involved releasing the cooperatives from the obligation to repay the loans taken out for construction, rebuilding and purchase of first cattle, pig and sheep barns up to 50% of costs related to erecting such facilities. Another form included subsi- dies granted from the budget of the Presidiums of National Councils to cover the costs of purchase of breeders (up to 70%) and the costs of drilling the wells (30 70% of the entire expenditures, depending on financial outlays)56.

Lending and financing agricultural circles

As of 1959, lending and financing was also provided to agricultural circles on special terms and conditions. Pursuant to the articles of association, each circle had a legal per- sonality, had its own real properties and movable properties, and could purchase, sell and encumber those properties. The agricultural circle s primary source of financing for conducting its activities included its own gathered funds (membership fees), profits from business activity conducted, and the Agriculture Development Fund (Fundusz Rozwoju Rolnictwa, FRR), constituting collective and indivisible property57. Bank Rolny kept the accounts of Fundusz Rozwoju Rolnictwa and the accounts of the agricultural circles own funds earmarked for investment outlays. On the other hand, settlement accounts of the circles were kept by savings and loan cooperatives. When financing and lending to agricultural circles, Bank Rolny provided them with finan- cial advisory services and through exerting impact with funds from FRR and own loans stimulated the individual agricultural circles to correctly conduct their activities58.

55. Ibidem, p. 36 verso.

56. Ibidem.

57. Ibidem.

58. Ibidem, p. 38.

126 T H E H I S T O R Y O F B G Z