Loans to inhabitants of rural areas

In the second half of 1950s, BR made significant changes to loans extended to inhabit- ants of rural areas. The Bank gradually took over the loans for rural communities from the Investment Plan, and incorporated them into its own lending plan. Thereby, it had to make independent decisions to either grant or refuse to grant a loan. Because of this, the Bank became completely independent from administrative distribution of funds in the form of loans, and it could conduct its own independent lending policy in rural areas, however only within the boundaries of the general guidelines of the state agricultural policy59. Initially, BR extended loans to farmers with small and medium farms. Later, it provided loans also to larger agricultural enterprises, rural craftsmen, and employees of agricultural and forestry services. Similar evolution in granting the loans was seen with regard to the objective of financing. Initially, the scope of loans extended by BR was lim- ited mostly to activities related to plant and animal production and construction. Later, the scope of lending assistance was gradually extended to include assistance to inhabit- ants of rural areas for residential construction, expansion of animal breeding operations, purchase of agricultural machinery and tools, and other farming purposes60. Additionally, BR improved and simplified its methods of extending loans to inhabitants of rural areas, especially with regard to ensuring that the loans were used as intended, the loans were properly collateralized and repaid, and that the formal requirements which were particu- larly burdensome to the borrowers were eliminated61. Very important projects financed with BR s loans extended to inhabitants of rural areas included development of water drainage systems and electrical grids. Those projects were carried out and financed on special terms and conditions. Outlays for water drainage sys- tems were planned by the Presidiums of Province National Councils (Wojewódzka Rada Narodowa). On the other hand, the limits and the main directions of investing were set by the Ministry of Agriculture. In most of the cases, drainage systems were developed by the state. The costs of work were incurred by the state budget, and most of the expenses related to the drainage system and development of the area after building the drainage system were incurred by the land owners, pro rata to the benefits which the drainage system gave them. Outlays for development of electrical grid in rural areas constituted a part of the invest- ment plans of Province National Councils which were a direct investor and decision- maker in development of the grid in the area. Funding was provided by the state budget. Bank Rolny extended loans to rural communities directly or via savings and loan coop- eratives (SOP). Long-term loans were extended directly by BR, and short- and medium- term loans were distributed via SOP. Lending activity of SOP was carried out using state funds, while BR s lending activity was carried out using refinanced loans. BR extended primarily investment loans for construction, re-building and significant renovations as

59. Ibidem.

60. Ibidem.

61. Ibidem.

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