The two types of banks closest agriculture—cooperatives and provincial
banks—were also those most affected by bank reform. For cooperatives, consolidation
will not likely affect the agricultural portfolio because they already lent to agriculture before consolidation not for politics but for profits. For provincial banks, privatization will likely shrink the agricultural portfolio for three reasons. First, much of the old agricultural portfolio was delinquent. Privatized banks will avoid bad risks. Second, provincial banks made risky loans in the name of development and used the fisc to cover losses. Privatized banks cannot ask taxpayers to pay for their mistakes. Third, provincial banks often ran directed-credit programs for agriculture. These will cease.