Tractor Financing Scheme

7/23/2019 Tractor Financing Scheme

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Lease Finance Facility For Purchase of Tractor under Green TractorScheme 2008-2009

In the wake of Chief Minister, Punjab's agenda for promotion of Agriculture Sector, Goernment of

Punjab has decided to proide !"""" #ractors to small farmers on subsidi$ed rates% A subsid& of S(

)"","""*+ per tractor will be proided to the farmers declared successful through computeri$ed balloting%

#he scheme has been ti tled as Green #ractor Scheme )""-+".% In order to facilitate farmers and to grasp

ma/imum business, our Management has approed a special product titled as 01AS1 2I3A3C12ACI0I#4 25 P6C7AS1 52 #AC#5 6381 G113 #AC#5 SC71M1 )""-+". with

following terms 9 conditions(

ELIGIBILITY

++All 2armers who hae been declared successful through computeri$ed balloting%

++#he applicant should be a resident, owner*self cultiator of minimum ": Acres of

agri land free from all encumbrances% 1/isting ;5P borrowers haing land under

;ank's charge are also eligible under this scheme%++#he applicant should not be a defaulter of an& 2inancial Institution%

PRICE OF TRACTOR

#he price of Green #ractor would be less b& S( )"","""*+ from market price of tractor% Subsid& of S()"","""*+ will be proided b& Got% 5f Punjab directl& to #ractor Manufacturers%

MAKE OF TRACTORGoernment of Punjab has approed M*s Millat #ractors ual to the price of locall& manufactured tractor less subsid& amount of

S( )"","""*+ to be proided b& the Goernment of Punjab% 7oweer, ma/imum amount of facilit& will

not e/ceed the e/ + factor& price of tractor%

EQUITY

3o 1>uit& for #ractors haing price up to S( :"","""

!"? e>uit& of Subsidi$ed Price ual 7alf 4earl& Installments


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A$ou%":Ma/imum s%D"", """*+%

E&ui"#:

!"? to )"? of the forced sale alue assessed b& banks and P;A approed sure&or%

Market and forced sale alue of the tractor will also be erified b& the ;ranch Manager

and AC5%

Se'uri"#:

FARMERS:

!% 0ease #ractor


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Directorate of Agriculture Statistics.

-

Data Assembly, Data Processing, and Forecasting and

reports on Food and Fiber System.

ii) Directorate of Economic Research.

-

Commodity situation reports, Farm Management and Agri-

business.

iii) Directorate of Agriculture Policy

-

Alternative policy options for agricultural and agricultural

business problems through input, production analysis and

other studies.

At the time of merger of Economic Wing, 20 posts of Field Investigators (BPS-

11) and seven posts of Statistical Assistant were surrendered and one post of Director

(AP) (BPS-19) was created. In 1989 there were three post of Statistical Officers, one post

of Survey Officer, one post of Economic Consultant, after 1993, due to Economic Cut,

down-sizing/right sizing, one posts of Deputy Director, one post of Survey Officer, twoposts of Statistical Officer and eleven post of Research Officers and four posts of Field

Investigators were abolished/ surrendered without any change in the assignment and

function/responsibilities of the officers.

Page 2Q. 2. What is Economic Wing?

Answer: The Economic Wing is a research and publication Wing of the Ministry of

Food, Agriculture and Livestock. This Wing is responsible for collection, compilation

and dissemination of agricultural statistics at national and international level and to

provide MINFAL timely and relevant economic and policy support under the rules of

business. This wing provides feed back to MINFAL on Agriculture Economic andrelated materials policy matter.

Q. 3. What is the role of Economic Wing?

Answer: The Economic Wing plays a vital role in the activities of the MINFAL. It

provides feedback to MINFAL in trade policy, agricultural policy, farm management,

dissemination of agricultural statistics etc to researchers, policy makers and planners in

public and private sector.

Q. 4. What are the functions of Economic Wing?

Answer: Economic Wing is responsible for providing economic and policy analysis

support to MINFAL, assembling and dissemination of agricultural statistics, monitoring

of agricultural credit, overview its disbursement and utilization including policy of

reforms, coordination with national and international agencies in economic matters. It

also provides strategy, planning and directions and economic intelligence on Food and

Agriculture Sector to MINFAL and other GOP Ministries, private organizations. This

wing also presents MINFAL and GOP in these matters in meetings on the behalf of

Secretary at national and international level.

Q. 5. What is composition of Economic Wing?

Answer: The Economic Consultant is head, overall incharge of the Economic Wing. He

supervises this wing in performing all activities. The following staff is working under his

supervision.


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1.

Director (BPS-19) ..(1)

in position

2.

Deputy Director (BPS-18)..(4)

2 in position & 2 vacant

3.

Research Officers (BPS-17)(7)

6 in E.W, 1 WTO

4.

Statistical Officer (BPS-17)(1)

vacant

Page 3Q. 6. How a publication can be obtained from Economic Wing?

Answer: If anyone require publication of Economic Wing. He must submit a request on

the name of Economic Consultant. The address is given as under:-

Raja Abdul HameedEconomic Consultant

Ministry of Food, Agriculture and Livestock

(Economic Wing)

Shaheed-e-Millat Secretariat, 8th Floor,

Islamabad

Q.7. What is the role of MINFAL in agricultural credit?

Answer: Ministry of Food, Agriculture and Livestock (MINFAL) monitors the credit of

banks in providing agricultural credit and also try to solve any hitch in disbursement of

agricultural credit.

Q.8. Which banks are proving agricultural loans to farming community?

Answer: Currently, 21 banks are disbursing agricultural loans i.e. 5 big banks (NBP,HBL, MCB, UBL & ABL), 14 Domestic Private Banks (Askari Com. Bank Ltd., Bank

Al-Habib Ltd., Bank Al-Falah Ltd., My bank Ltd., Faysal Bank Ltd., Habib Metropolitan

Bank Ltd., PICIC Com. Bank Ltd., KASB Bank Ltd., Prime Com. Bank Ltd., Saudi Pak

Com. Bank Ltd., Soneri Bank Ltd., The Bank of Khyber, The Bank of Punjab & Standard

Chartered Bank (Pakistan) Ltd.) and two specialized banks (ZTBL & PPCBL).ECONOMIC CONSULTANTDeputy Director (AE&S)

ORGANIZATIONAL CHART OF E.WINGDIRECTORDeputy Director (ES)

Deputy Director (FM)

(Vacant)

Deputy Director (AP)(Vacant)

Research Officer

Research Officer

Statistical Officer

Research Officer

Research Officer

Research Officer

Research Officer

Research Officer

Page


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Q.9. What are the per acre credit limit for different crops?

Answer: The indicative per acre credit limit for major crops are as under:

i.

Sugarcane

Rs.18,000/-

ii.Paddy (Rice)

Rs.9,000/-

iii.

Wheat

Rs.8,000/-

iv.

Cotton

Rs.11,000/-

v.

Other crops

As per actual cost

Q.10. What are the per acre credit limit for Matured Orchard of various types offruits?

Answer: The per acre credit limit for matured orchard of various types of fruits are as

under:

i.

Mango

Rs.30,000/-

ii.

Citrus

Rs.25,000/-

iii.

AppleRs.30,000/-

iv.

Banana

Rs.25,000/-

v.

Jujuba

Rs.10,000/-

vi.

Guava

Rs.15,000/-

vii.

CoconutRs.15,000/-

viii.

Litchi

Rs.25,000/-

ix.

Palm

Rs.15,000/-


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Q.11. What is the classification of Agricultural Finances?

Answer: Agricultural credit is provided in different types/schemes: i.e. Short Term

Credit (it is basically for production purposes and is given for a period less than a year),

Mid Term Credit (it is provided for both production and development purposes and is

given for a period of 3 to 5 years), Long Term Credit (it is basically provided for

development purposes and is given for a period of more than 5 years).Q.12. What is Revolving Credit Scheme?

Answer: The banks can provide finance for agricultural purposes under this scheme on

the basis of revolving limits for a period of three years with one time documentation. The

borrowers are only required to clear the entire loan amount (including mark-up) once in a

year at the date of their own choice. Multiple drawls are allowed and the borrowers are

also allowed to make partial repayments. Only the amount utilized by the borrower will

attract mark-up. This facility can be availed by the farmers just like Credit Card. The

limits under this scheme are automatically renewed on annual basis without any request

or fresh application.

Q.13. What is the rate of mark-up on agricultural loan?

Answer: The mark-up rate varies from bank to bank, about 9% to 15%.

Q.14. Is any bank-providing rebate to the farmers if loan is paid back within time?

Answer: Only ZTBL is providing 1% rebate if the loan is paid back within due time.

Page !Q.15. How many borrowers the banks are serving?

Answer: At present, agricultural credit is being provided from banking sector to 1.627

million (25%) borrowers out of potential market of 6.6 million borrowers.

Q.16. Who is eligible for agricultural credit from the banks?

Answer: All categories of farmers (owner, owner-cum-tenant and tenant) and Non-Farm

households (small & large farms) in Pakistan are eligible for agricultural/farm credit for

the banks subject to completion of required formalities.

Q.17. What are the eligibility criteria for availing of agricultural credit from the

banks?

Answer: The applicant should fulfill the following criteria/requirements:-

i. He must be a genuine farmer/tenant. For this purpose a farmers name must

appear in revenue record and a tenant should establish this fact through a

government paper or he must be handling Non-Farm activities like livestock,

poultry, dairy farming, fishery, forestry etc;

ii. He should not be the defaulter of any bank.

iii. He must produce proper securities / sureties / passbook or other collaterals

acceptable to the banks.

Q.18. For what purposes the banks provide Agricultural Credit?

Answer: Agricultural credit is provided by the banks for complete value chain of

activities such as production/crop loans i.e. in-puts (seed, fertilizer, & pesticides etc.),

development loans (tractors & tubewells, agricultural machinery / equipments /

implements etc.), corporate farming, marketing, cold storage (godowns) on farm & off

farm, silos, processing of crops (other than major crops), fruits & vegetables, grading,

polishing, packing, transportation and exports of agricultural goods etc. Agricultural

credit is also available for non-farm sector such as poultry, livestock, dairy farming,

forestry and fisheries, apiculture, sericulture, floriculture, horticulture etc.


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Q.19. What are basis of classifying farms by small, medium and large in four

provinces?

Answer: Details of size of land holdings for various categories of farms in different

provinces are as under: -

Name of Province

SubsistenceHolding

(Small Farmers)

Economic

Holding

(Medium)

Above Economic

Holding

(Large)

Punjab

Up to 12.5 Acres Above 12.5 Acres

to 50 AcresAbove 50 Acres

NWFP


to 50 Acres

Above 50 Acres

Sindh

Up to 16 Acres

Above 16 Acres

to 64 Acres

Above 64 Acres

Balochistan

Up to 32 Acres

Above 32 Acres

to 64 Acres

Above 64 Acres

Page "Q.20 What types of sureties / security/collaterals are acceptable to the banks for

providing agricultural credit to farmers/growers?

Answer: Passbook, urban/rural property, commercial property, Defense Saving

Certificates, Special Saving Certificates, Gold & Silver Ornaments and personal surety.

Q.21. What are the basis for entitlement of loans against Passbook, rural and

commercial properties, DSCs, SSCs, Gold / Silver etc. for different agricultural

loans?

Answer: The basis for entitlement of loan from the banks for the farmers is 80% against

passbook, 75% of encashment value of DSCs and SSCs and 60% of rural/commercial

properties and gold / silver ornaments etc. However, these ratios may differ from bank to

bank depending upon their credit policy and credit worthiness of borrower.

Q.22. What is the limit of loans against personal surety?


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Answer: The limit of Agricultural loans against two credit worthy sureties acceptable to

the bank in lieu of mortgage of land is Rs.100, 000/= per borrower. However, total

guarantee of one guarantor should not in any case exceed Rs.500, 000/= excluding

Processing Units.

Q.23. Is there any system/procedure under which farmers can get agricultural

loans at their doorsteps?Answer: Mobile Credit Officers (MCOs) and Agricultural Credit Officers of banks are

visiting the villages regularly to ascertain the credit needs of the farmers and ensure its

availability at their doorsteps and for technical help for different crops. Banks also

provide loans to farmers for seasonal crops at their doorsteps, under one window

operations.

Q.24. Banks are vigorously going for car leasing business. Cant such facility be

extended to farming / rural community by providing agricultural

machines/equipments / implements including tractor on leasing, hiring, rental basis?

Answer: The SBP has already allowed the banks to extend leasing facilities to the

farmers under the scheme for tube wells, tractors, harvesters etc. if these are free from all

encumbrances. These machines/equipments / implements are also available to the farmers

on hiring, leasing and rental basis through Leasing Companies.

Q.25. What type of data is contained in the publication Agricultural Statistics of

Pakistan?

Answer: Agricultural Statistics of Pakistan 2005-06 contains data on area, Production

of agricultural commodities, land use, agricultural inputs, mechanization, livestock,

fisheries, forestry, trade, prices, and miscellaneous statistics regarding agriculture. This

booklet can be viewed on www.minfal.gov.pk.

Q.26. Which publication could be referred to have import and export statistics of

fruit, vegetable and condiments with destination and sources?

Answer:The publication namely Fruit Vegetable and Condiments of Pakistan is

referred for this purpose the same may be perused on www.minfal.gov.pk.

Page #Q.27: Where from District Wise Area Production of Crops can be seen?

Answer:The District Wise area and production of 54 major/minor crops including fruit,

vegetables and condiments can be seen from this wings publication Crops area

Production (By District)

Q.28: What type of information/data is provided to FAO?

Answer:FAO supplies more than 15 questionnaires around the year.

These

questionnaires have data of area production of crops, oilseed pulses, condiments, fruit,

vegetables prices of agricultural commodities, fertilizer. These questionnaires are filled inaccording to the requirement of the question and returned back to FAO.

Q.29: Which international agencies demand for furnishing of data?

Answer: SAARC, FAO, Asia Pacific, IMF and ECO request for supply of data according

to their needs/ requirements.

Q.30: Who are the end users of Economic Wings data?

Answer: Researchers, planners, policy makers, students, farmers and mill/factories

owners are the end user of Economic Wings data.


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Q.31: Which publication is referred for item wise, province wise Area Production

of Fruit, Vegetables and Condiments?

Answer:The publication namely Fruit Vegetable and Condiments of Pakistan is

referred and can be viewed on MINFALs website.

Q.32: When Kharif crops final estimates are released?

Answer: MINFALs Economic Wing is responsible for the preparation and release of thefinal estimates of cotton, sugarcane, rice, maize, kharif pulses, jowar, bajra, kharif fruit

and vegetables. Economic Wing MINFAL finally notifies these estimates by 30th

June

every

year

for

circulation

among

Federal/Provincial

Government

Departments/Autonomous Bodies.Q.33: When Rabi crops final estimates are released?

Answer:Likewise Kharif estimates MINFALs Economic Wing is also responsible for

the preparation and release of wheat, barley, oilseed, masoor, matter and other rabi crops

Economic Wing MINFAL finally notifies these estimates by end of every year for

circulation among Federal/Provincial Government Departments/Autonomous Bodies

Q.34: What is the Area Production and Yield of major crops?

Answer: Refer to following table Nos. of this Wings publication Agricultural Statistics

of Pakistan 2005-06 available on MINFALs website.

Table No. 3 for Wheat

Table No.6 for Rice,

Table No. 8 for Maize,Table No.13 for Sugarcane,

Table No.14 for Cotton,

Page 8Q.35: What is the Area Production and Yield of Important Minor Crops?

Answer: Refer to following table Nos. of this Wings publication Agricultural Statistics

of Pakistan 2005-06 available on MINFALs website.

Table No.9 for Bajra,

Table No.10 for Jowar,

Table No.11 for Barley,

Table No.18 for Tobaccoo,

Table No.41 for Potato,

Q. 36: What are the Area Production and Yield of Pulses?

Answer: Refer to following table Nos. 21 to 28 of this Wings publication Agricultural

Statistics of Pakistan 2005-06 available on MINFALs website.

Q.37: What are the Area Production and Yield of Oilseeds?

Answer: Refer to following table Nos. 29 to 34 of this Wings publication Agricultural



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Q. 38: What are the Area Production and Yield of Important Condiments?

Answer: Refer to following table Nos. 35-40 of this Wings publication Agricultural


Q.39: What are the targets of important crops for the year 2006-07?

Answer: Refer to table No. 60 of. Agricultural Statistics of Pakistan 2005-06 available

on MINFALs website.Q. 40: What is the percentage sowing of different groups of crops during the year

2005-06?

Answer: Refer to table No. 62 of Agricultural Statistics of Pakistan 2005-06 available

on MINFALs website.

Q.41: Provide the information about area irrigated by different sources?

Answer:Refer to table No. 64 of Agricultural Statistics of Pakistan 2005-06 available

on MINFALs website.

Q.42: What is the intensity of water logging and salinity in Pakistan?


on MINFALs website.

Q.43: Provide the information regarding consumption, production and import offertilizers?

Answer: Refer to table No. 76-85 of Agricultural Statistics of Pakistan 2005-06

available on MINFALs website.

Q.44: How much water is available for irrigation at farm gate?

Answer: Refer to table No. 86-A of Agricultural Statistics of Pakistan 2005-06


.

Page 9Q.45: Is there any record of rainfall at different stations?

Answer: Refer to table No. 87 of Agricultural Statistics of Pakistan 2005-06 availableon MINFALs website.

Q.46: How much pesticides were consumed in Pakistan during 2006?

Answer: Refer to table No. 91 Agricultural Statistics of Pakistan 2005-06 available on

MINFALs website.

Q.47: How much electricity and petroleum products were consumed in agriculture

sector during 2005-06?

Answer: Refer to table No. 119-120 Agricultural Statistics of Pakistan 2005-06


Q.48: What is the livestock population in Pakistan?


available on MINFALs website.Q.49: Is there any statistical data regarding livestock products?



Q.50: Provide a brief information regarding import/export of major agricultural

commodities?




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Q.51: What are the support/intervention prices of wheat, rice, cotton and

sugarcane?

Answer: Refer to table No. 143, 144 & 145 of Agricultural Statistics of Pakistan 2005-

06 available on MINFALs website.

Q.52: What is the per capita availability of major food items in Pakistan?

Answer: Refer to table No. 167-173 of Agricultural Statistics of Pakistan 2005-06available on MINFALs website.

Q.53: What is the share of agriculture sector in PSDP/ADP in provinces?


on MINFALs website.

Q.54: Which crops are taken in cereals?

Answer:The following six crops are taken in cereals crops

1. Wheat,

2. Rice,

3. Jowar( Sorghum),

4. Maize,

5. Bajra (Millet),6. Barley.

Page $0Q.55. Is there any guidelines issued by SBP for financing to livestock and fisheries

sector?

Answer: SBP has issued guidelines for livestock and fisheries sector financing which can

be seen on their website www.sbp.org.pk/departments/acd.htm.

Q.56. What is Corporate Agriculture Farming (CAF)?

Answer: Corporate Agriculture Farming (CAF) is sustainable growth in the agriculture

farming system on the pattern of industry by combining agriculture and processing

activities at one place.Q.57. Is there any Government sanction required to undertake CAF except

registration with BOI?

Answer: No registration/permission is required by the government to undertake CAF.

However, company is required to be registered with Board of Investment (BOI) and

Security and Exchange Commission of Pakistan (SECP).

Q.58. Is there any legal entitlement for Corporate Farms?

Answer: Only such local and foreign companies are entitled that are locally incorporated

under the Companys Ordinance 1984 with agriculture base.

Q.59. Is there any tax on Corporate Farms?

Answer: There is no tax applied on corporate farms?

Q.60. What is the import duty on machinery imported for CAF purposes?Answer: There is no import duty on machinery imported for CAF purposes.

Q.61. What is upper limit of land ceiling for CAF?

Answer: There is no upper limit of land ceiling for CAF.

Q.62. Is there any duty on transfer of land?

Answer: All provinces have waived off one time stamp duty on transfer of land for CAF

purpose.

Q.63. Is there any policy package for CAF?


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Answer: Yes, the following points have been approved for CAF:

1. Only such local and foreign companies will be entitled to Corporate Agriculture

Farming that are incorporated in Pakistan under the Companies Ordinance, 1984.

2. There may not be any upper ceiling on land holding for CAF by amending

relevant laws. The size of the proposed corporate farm may be left to be

determined by the prospective investor.

3. Agriculture Income Tax regime applicable in provinces, on income from

agriculture, would be applicable to Corporate Agriculture Farming.

4. Tax relief in shape of First Year Allowance of 75% of machinery cost be allowed

to set-off provincial AIT.

5. Labour laws may not be presently applicable to corporate agriculture companies.

Due to special circumstances of the agriculture sector however appropriate labour

laws be developed for this sector within five year.

Page $$6. Zero-rated duty be charged on import of agriculture machinery and equipment

and also exempted from Sales Tax.

7. Machinery items for wheat/grain storage and cool chain may be included in SRO437(I)/2001.

8. Wherever possible, state land may either be sold or leased to the investors for 50

years, extendable for another 49 years. Preference in this respect will be given to

cultural wastelands, which is otherwise fit for cultivation.

9. Duty on transfer of land to CAF will be exempted.

10. 100% foreign equity will be ultimately allowed (in the CAF).

11. No Government sanction required undertaking CAF except registration with BOI.

12. Exemption of the dividends (of CAF companies) from tax.

Q.64. What are the areas of investment for CAF?

Answer: Following are the areas of investment for CAF:

1. Land development/reclamation of barren land, desert and hilly areas foragriculture purpose and crop farming.

2. Reclamation of water Front Areas/ Creeks.

3. Crops, Fruits, Vegetables, Flowers Farming/Integrated Agriculture (Cultivation

and processing of crops).

4. Processing of agriculture products.

5. Modernization and development of irrigation faculties and water management.

6. Plantation/Forestry.

7. Dairy, small ruminants (sheep, goat) and all other livestock farming.

Appendix-I

AGRICULTURAL LOANS SCHEMEState Bank of Pakistan takes keen interest in providing credit facilities for

agriculture, both through the development of credit institutions as well as through

providing credit lines to the development banks and incentives to Commercial Banks. It

is laid down in Section-8 (3) of the State Bank of Pakistan Act, 1956 that the State Bank

shall create a special Agricultural Credit Department with the following functions: -

1. To maintain an expert staff to study all questions of agricultural credit and

be available for consultation by the Federal Government, Provincial

Governments, Provincial Cooperative Banks and other banking


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organizations.

2. To co-ordinate the operations of the Bank in connection with agricultural

credit and its relations with the Provincial Cooperative Banks and any other

organizations engaged in the business of agricultural credit.

Prior to 1972, Commercial banks lending to agriculture was nominal. Bulk of credit

to this sector was being provided by the Agricultural Development Bank of Pakistan

(now ZTBL). With the introduction of Banking Reforms in 1972, several institutional and

policy changes were made with the objective of more equitable distribution of bank credit

among various sectors and groups. Agriculture sector was also a beneficiary of these

policy reforms.

In exercise of the powers vested in the State Bank of Pakistan, under Section 25 of

Banking Companies Ordinance 1962, effective from 1st

December 1972 an Agricultural

Loans Scheme was introduced. In the absence of adequately developed specialized

institutions for this sector, commercial banks, with their large network of branches, were

inducted in mandatory agricultural financing under this Scheme.

Agricultural Credit Advisory Committee (ACAC) in one of its meetings observed

that the agricultural credit disbursed by Nationalized Commercial Banks was being

diverted to non-agricultural purpose and the position of recovery of these loans was not

satisfactory. The Committee also felt that the solution of the problem lay in expansion of

supervised credit scheme. It was decided that NCBs should, in future, disburse

agricultural loans under a Model Scheme, which would be developed by Pakistan

Banking Council. The Pakistan Banking Council, in consultation with NCBs and some

agricultural credit experts, prepared a draft model scheme for agricultural credit. The

draft scheme was considered by ACAC in its meeting held on 2nd

July, 1986. ACAC set

up a sub-committee to examine the Scheme, which examined the draft Scheme and

submitted its report on 6thAugust 1986. The State Bank of Pakistan has since approved

the Scheme and advised the Pakistan Banking Council to allocate territorial jurisdictions

to Nationalized Commercial Banks for implementing the Scheme. The allocation of

territorial jurisdiction among the Nationalized Commercial Banks was made on tehsil-

wise basis in consultation with banks. Due to lack of trained and qualified staff the

Scheme was implemented under a phased program and it was planned to cover all tehsils

under the scheme by the 31st

December 1990. In the first phase, w.e.f 1st

October, 1987 it

was introduced in 107 tehsils- 30 tehsils each in Punjab and NWFP, 37 in Sindh and 10 inBaluchistan. The second phase of the scheme was started in February, 1989 and 223

more tehsils were included in the Scheme. The Supervised Agricultural Credit Scheme

was revamped significantly in April 2001 on the initiatives of commercial banks under

the leadership of Muslim Commercial Bank Limited. It was decided to withdraw the

restrictions on commercial banks for making disbursements only within their respective

territorial jurisdictions,i.e., Union Councils/Town Committees allocated to them. On 2nd

August, 2001, under Section-25 of Banking Companies Ordinance 1962, fourteen new


14/22

Page 2

2Domestic Private Banks were inducted in the Agricultural Loans Scheme and indicative

targets were allocated to them for the year 2001-02.

Agricultural Credit EstimatesThe targets of agricultural loans were set by the National Credit Consultative

Council (NCCC) and were based on the recommendations of the Agricultural Credit

Advisory Committee (ACAC). ACAC was set up in 1972 to assess credit requirements of

the agriculture sector in order to assist the NCCC in the preparation of the Annual Credit

Plan and to consider the ways and means for improving the disbursal and recovery of

agricultural credit together with suggesting measures for the strengthening of

institutional framework of agricultural credit.

The ACAC, with the assistance of Committee of Experts appointed by it, evolved

a methodology for the preparation of estimates of agricultural credit requirements. First

devised in 1973-74, the methodology was subsequently revised in 1978-79, 1983-84,

1989 and lately in 2001. Cash requirements for production loans were estimated on the

basis of total acreage of land under various crops and the cost of inputs for each crop in

each province, and the estimated personal savings of various categories of farmers in

terms of size of holdings. On the basis of recommendations, made by committee of

experts in its revised methodology report 2001, the ACAC approved that the effective

demand for bank credit as percentage of total cash requirements for seeds, fertilizers and

pesticides would be 95%, 60% and 40% for small, medium and large farms respectively

as against the 90%, 60% and 40% for small, medium and large farms respectively given

in the earlier report of 1989. These calculations took into account the saving capacity of

various categories of farmers, lending capacity of credit agencies and other relevant

factors. In these calculations, it was assumed that all the farmers do not need credit to

their full entitlements. This would make it possible for credit agencies to meet genuine

credit needs of each farmer in full. This report would be useful to ProvincialGovernments for calculating their cash and credit requirements for farm and non-farm

sector. It also provides useful information to banks to identify and meet genuine credit

needs of farmers. Finally, farmers can benefit from information regarding the items

eligible for the agricultural credit.

The salient features of the Agricultural Loans Scheme and amendments made

from time to time were conveyed to banks through ACDs Circulars, issued from 1972

till date. However, to facilitate the banks/ stakeholders, the latest status of the

Agricultural Loans Scheme in a comprehensive form is given as under:

Loan Categories

In order to protect the interest of the small farmers, the Agricultural Loans

Scheme, under Section 6(A) Grant of loans to be in specified ratio (Government of

Pakistan, Finance Division No. SRO-859(1)/73 dated the 16th

June, 1973 read with

Section 5 of Act No. XLII of 1973) and Loans for Agricultural Purposes Rules, 1973,

guarantees that agricultural loans granted by banks to farmers shall be diversified to

achieve the following ratios: -

i) Land owners having land not exceeding

subsistence holding ..70%


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ii) Land owners having land, exceeding subsistence

holding, but not exceeding economic holding... 20%

iii) Land owners having land exceeding economic

holding... ..10%

Page 33Eligibility

Finance can be provided to all categories of farmers (owner, owner-cum- tenant

and tenant). The commercial banks will not reject any application for agricultural loan

except for the following valid reasons that must be recorded in writing:

?? The applicant is not a genuine farmer.

?? The applicants name does not appear in the Revenue records.

?? The applicant is a defaulter of the banking system.

?? The applicant is unable to produce proper securities/sureties/passbook.

?? Credit proposal in excess of entitlement.

Small Loans for AgricultureThe Agricultural Loans Scheme was introduced with effect from December 1st

,

1972. The definition of small loan for agriculture, amended from time to time is as

under:

i)

Bank loans and advances etc. given to farmers with holding upto

25 acres for meeting their agricultural production requirements for

the purpose of Mandatory Credit Targets (23-03-1978).

ii)

All loans to farmers who were exempted from payment of land

revenue (farmers with land holding of upto 25 acres of irrigatedland and 50 acres of un-irrigated land) were treated as small loan

for agriculture (26-09-1978).

iii)

Bank loans and advances given by the banks to farmers holding

land upto 12.50 acres for meeting their agricultural production

requirements were treated as small loans for the purpose of

Mandatory Credit Targets (20-08-1979).

iv)

Loans and advances including bills purchased and discounted

whether clean or secured, given by the banks to the farmers

holding land not exceeding the subsistence holding as defined

for various Provinces by law for meeting their agricultural

production requirements, were treated as small loans for the

purpose of Mandatory Credit Targets (09-02-1980).

(The data for small loans is collected from the Banks through statement

S as per Annexure-I).

Size of Land Holding

Details of size of land holdings for various categories of farms in different

provinces are given as under: -


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Name of

Province

Subsistence

Holding

Economic

HoldingAbove Economic

Holding

Punjab


to 50 Acres

Above 50 Acres

NWFP


to 50 Acres

Above 50 Acres

Sindh

Up to 16 Acres

Above 16 Acres

to 64 Acres

Above 64 Acres

Baluchistan

Up to 32 Acres

Above 32 Acres

to 64 Acres

Above 64 Acres

Page

4Areas to be covered.

The Agricultural Loans Scheme has been designed to cover entire Pakistan with

no restriction of territorial jurisdiction.

Surety / Security Required For Agricultural Loans

1.

Surety

The limit of Agricultural Loans against two credit worthy sureties acceptable to

the bank in lieu of mortgage of land is Rs.100,000/= per farmer per year. However, total

guarantee of one guarantor should not in any case exceed Rs.500,000/= excepting a

Processing Unit.

2.

Security

Agricultural credit can be availed against security of agricultural land by creating

charge under the passbook system. Bank can accept agricultural land as security on the

basis of the realizable value /forced sale value, instead of accepting only agricultural land

as security on the basis of market value or PIU. The value of per PIU has been fixed at

Rs. 400/-by the Government of Pakistan, Finance Division (Internal Finance Wing),

under Notification No. F.3 (6) IF/89 dated the 17


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th

December, 1999.

Loan Payment in Cash/ Kind

Banks are allowed to provide agricultural loans in cash or in kind at the choice of

borrowers to make them able to purchase inputs at the Bargain Price from the market.

Multiple/Revolving Limit of Agricultural Loans

Bank can provide running finance for agricultural purposes on the basis ofmultiple/revolving limits for period of three years in addition to demand finance (single

disbursement) under the Supervised Agricultural Credit Scheme. Banks are now allowed

to renew the limits automatically not only on 100% adjustment of the previous loans but

also in case of partial adjustments if these are regular advances. Banks will not ask for

any fresh document at the time of each renewal.

Lending Rate

Since July 28th

1997, State Bank of Pakistan has removed cap on the minimum

lending rates to be charged by the Commercial Banks on agricultural financing. The cap

on maximum lending rates was removed in October 1995. Banks are now free to charge

the mark-up from the borrowers, on the competitive basis determined under market

forces. State Bank of Pakistan is providing credit lines only to ZTBL and PPCB on the

prevailing Government T. Bill rates in the market. However, as the mark-up rates in the

market have been reduced significantly, accordingly banks have also reduced their mark-

up rates in line with market forces and the benefit of such reduced mark up rates is being

passed on to the borrowers. Commercial banks have to disburse their Mandatory Credit

Targets allocated to them from their own sources / deposits.

Normal Sowing And Harvesting Times of

Important Crops in Different Provinces.

The normal times of sowing and harvesting of various crops in different provinces

Page !5as conveyed by Ministry of Food, Agricultural and Livestock are given as under:-Normal Time of Harvesting

Normal Time of Sowing

Name

of Crop

Punjab

Sindh

NWFP

Baluchistan

Punjab

Sindh

NWFP

Baluchistan

Wheat

Oct/Nov.

Sept/Nov.

Oct/Nov.

Sept/Nov.

May/June.

April/June

May/June

April/June.

Cotton


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May/June. April/June

April/May.

-

Oct /Dec.

Sep/Dec

Oct /Dec.

-

Rice

June/July.

June/July.

June.

June/July.

Oct/Nov.

Sep/Nov.

October.

October.

Sugar-

Cane

Feb/Mar.

Feb/Mar

& Sep/Oct.

March

&

Sep/Oct.

Feb/March

Nov/Mar.

Oct./April.

Nov/March.

Nov.

Tobacco

Jan/March

Sept.

Nov./Dec.&

March

May.

June.

Oct/Nov.

May/June &

Sep/Oct.

Oct /Dec.

Indicative Per Acre Credit Limit For Major Agricultural Crops

The indicative per acre credit limit for major agricultural crops is given as under:-

(1)

Sugarcane Rs. 8,000/-

(2)

Paddy

Rs. 4,500/-

(3)

Wheat

Rs.4, 000/-?

(4)Cotton

Rs.6, 000/-

(5)

Potato Rs.11, 000/-

(6)

Tobacco

Rs.9, 000/-


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(7)

Other Crops

As per actual cost.?

The indicative per acre credit limit for Wheat to be enhanced up to

Rs.5, 000/-if threshers are borrowed/rented in by the farmers for the crop.

Moreover these limits are only indicative limits for the purpose ofguidance of the banks. However, banks may provide finance over and

above/lesser limits to the borrowers depending upon actual assessments at

the time of lendings.

Mandatory Credit Targets

1) SBPs power of fixing targets and penal deposits

State Bank of Pakistan is authorized to determine the policy in relation to

advances to be followed by the banks in general or by any bank in particular. In

accordance with the above powers, the SBP has been prescribing mandatory credit targets

for NCBs/ABL/MCB/UBL on yearly/ half- yearly basis since 1972.

The targets allocated to commercial banks are advised on six monthly basis with

the ratio of 40:60 i.e. 40% for the first half and 60% for the second half. Under Section25(4) of Banking Company Ordinance, SBP is authorized to penalize the banks asking

them for keeping special deposits with SBP for such an amount and on such terms and

conditions as may be laid down by SBP in this behalf. Thus any short fall in meeting such

targets had to be deposited with SBP with interest free account. However net penal

deposits remaining with SBP for six months will be refunded to the banks even if the

short fall in Mandatory Credit Targets remains un-met. (The data for monitoring of the

Page "

6targets is collected from the banks as per statement T-Annexure-II and another

statement -Annexure-III).2) Distribution of Mandatory Credit Targets

into Production and Development Loans.

Banks are now free to extend development loans to farmers other than small

farmers up to 50% of their targets (Main Agriculture) subject to the condition that they

shall ensure to make financing of the remaining 50% of their mandatory credit targets to

small farmers for production/crop loan. The data in respect of Disbursement & Recovery

on half yearly/yearly basis through X & Y statements, monthly and cumulative

position of Disbursement & Recovery through statements D and R for monitoring the

disbursement & recovery position holding-wise, purpose-wise and province-wise as per

Annexure- IV-VII.

3) Agricultural Credit Facilities Covered

under Mandatory Credit Targets.

1. Leasing financing facilities to the farmers under the scheme for

tube wells, tractors, harvesters, etc.with the banks for availing

agricultural credit if these are free from all encumbrances.

2. Equity participation by banks in corporate agricultural farm units.

3. Financing by the banks for export of agricultural products by

farmers/marketing companies to be a part of agricultural financing

on items like raw cotton, cotton yarn, mutton and beef, wool and


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animal hair, fish other than frozen and preserved, foodstuff for

animals, all grains, fertilizer crude, oil seeds, nuts and kernels, live

animals, etc., without refinance from SBP on subsidized basis.

4. Non-fund based facilities extended by banks for Corporate

Farming.

5. The credit that is disbursed by banks for processing of crops other

than major crops (viz. Wheat flour mills, Cotton ginning factories,

Sugar mills, Rice husking mills etc.) and polishing and grading of

fruits.

6. The commercial banks lending to micro credit institutions,

recognized NGO and Rural Support Organization.

7. The commercial banks financing to ZTBL for onward lending to

farmers. This also includes inter bank lendings (participating

banks) for onward financing for agricultural purposes as defined in

the Scheme.

8. Agriculture loans by banks for export of fruits, vegetables, poultry,

livestock, dairy farming and tobacco marketing.

9. The commercial banks lending to farmers through discounting ofdeferred payment vouchers of Tobacco, Sugarcane, and processing

units.

10. The financing made by banks against mortgage of any property

rural or urban, earmarking of deposit, lien on Defense Saving

Certificate (DCS), Special Saving Certificate, Gold and Silver

Ornaments, if such credit is obtained by the farmers for

agricultural production only.

Page #

7

11. There is no restriction on the banks to provide agricultural loans tothe farmers having/below subsistence holding i-e Punjab & NWFP

(upto 12.5 acres), Sindh (upto 16 acres) and Balochistan (upto 32

acres) for purchase of new/old tractors subject to completion of

required formalities. (The data for tractor financing is collected

from banks as per Statement-TGLQ (Annexure-VIII).

12. The credit provided by banks to farmers/growers/other private

sectors for construction of cold storages/godowns/silos and other

structures for storage of agricultural produce at a debt equity ratio

of 60:40 at normal lending rate. The data for this item is collected

from banks as per Statement-TGLQ (Annexure-VIII) on monthly

basis.

13. The financing made by banks to leasing companies for providingagricultural equipments/machines on leasing/rental/hiring basis to

the growers / farmers. The data for this item is collected from

banks as per Statement-TGLQ (Annexure-VIII) on monthly basis.

14. The credit provided by banks for processing of high quality seeds

to Seed Processing Units. The data for this item is collected from

banks as per Statement-TGLQ (Annexure-VIII) on monthly basis.

15. The financing provided by banks for preparation and installation of


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steel / metal capsules for storage of all agricultural produce.

4) Eligible Items for Agricultural Credit.

The list of the eligible items for agricultural credit under Agricultural Loans

Scheme is attached as Annexure-IX.

GUARANTEE

Bonafide losses incurred by the banks due to non recovery of an agricultural loansmade under the scheme, as proved to the satisfaction of SBP, would be guaranteed up to

50% in terms of Section 17 D (2) of the State Bank of Pakistan Act, as amended by the

State Bank of Pakistan (amendment) act, 1972. These loans would be qualified for

bonafied losses subject to fulfillment of the following conditions:

I. Loans have been given strictly in accordance with the provision of

the scheme.

II. All formalities required prior to the sanction and disbursement

have been meticulously observed; and

III. All efforts for recovery of loans including legal remedies available

to the banks have been exhausted.

(Presently this facility is provided only to big five commercial banks to

which Agricultural Credit Targets are given on mandatory basis ratherthan voluntary basis.)

Other provisions of the Agricultural Loans Scheme shall remain +

unchanged.

List of Annexures

I-IX. Details of incoming statements (province/area-wise) required from

banks for monitoring purposes and List of Eligible Items.

Page 8

8

Details of Annexures(Details of incomings statements (province/area-wise) required from banks for

monitoring purposes and List of Eligible Items)

I. Statement S-monthly statement of agricultural loans qualifying for State Bank

Guarantee at the end of .month/year.

II. Statement T-monthly statement regarding credit targets on the last working day

of .month/year.

III. Disbursement of agricultural credit by commercial banks for the month of

.. month/year.

IV. Statement X-Agricultural Loans disbursed on half yearly (July-December) and

yearly (July-June) basis. month/year.

V. Statement Y- showing the position of recovery of agricultural loans during the

period on half yearly (July-December) and yearly (July-June) basis..month/year.

VI. Statement D- showing the position of disbursement of agricultural production and

development loans for the month of ( month & year).

VII. Statement R- showing monthly & commulative position of recovery of

agricultural loans for the month commulative period, i.e., from July to

.. year..

VIII. Statement-TGLQ showing province-wise data of financing for purchase of tractors,


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construction of wheat storage (silos and other wheat storage areas), finance

provided to the Leasing Companies by the Banks for the purpose of providing

agricultural equipments/machines on leasing/rental/hiring basis to the farmers and

finance provided to the farmers/borrowers for purchase of high quality seed

processing units during the month of ( month & year).

IX. List of Eligible Items for Agricultural Credit.

Documents

Tractor Financing Scheme