The Presidents / Chief Executives,
(NBP,HBL,UBL,MCB,ABL), Fourteen Domestic Private Commercial Banks,
Zarai Taraqiati Bank Ltd. Punjab Prov. Cooperative Bank.Ltd.

Dear Sir,

REVOLVING CREDIT SCHEME FOR AGRICULTURE

It may be recalled that while enhancing / revamping the scope & eligibility criteria under the Supervised Agricultural Credit Scheme circulated vide our circular No. ACD /1035-1039/PD (P) –08/2001 dated 25th April 2001, a scheme namely “Revolving Credit Scheme” was introduced on the recommendation of all participating banks as well as Chambers of Agriculture and Farmers / Growers Associations. The spirit behind the introduction of the said scheme was to facilitate the farming community in timely availement of credit without repeated documentations, bank visits and approvals of the limits against full repayments.

Since introduction of the said scheme, various difficulties and complaints were observed in its implementation and adoption of different definitions and procedures by each bank. In order to implement the Revolving Credit Scheme smoothly and uniformly, it was decided by the Agricultural Credit Advisory Committee (ACAC) at its meeting held on 4th July 2003, to develop uniform and standardized definition and procedure, for banks under Agricultural Loans Scheme in consultation / consensus with all the participating banks. Accordingly the scheme has been developed with the salient characteristics as three years revolving credit with automatic renewal, one time documentation, partial repayments and annual cleaning of account (Principal and Markup) at any date convenient to the Borrower. Major Commercial Banks (ABL, HBL, MCB, NBP and UBL), Domestic Private Commercial Banks, Zarai Taraqiati Bank Ltd. (ZTBL) and Punjab Provincial Cooperative Bank Ltd. (only for lending to individuals) are therefore, advised to introduce the enclosed “Revolving Credit Scheme” for Agriculture Credit with immediate effect as per annexure-A.

Efforts have been made by the State Bank of Pakistan to develop a uniform definition and procedure of the said scheme, in accordance with the provisions of Banking Laws and Practices, including Prudential Regulations and without compromising the security and interest of the lending banks and privileges of the farming community under the enhanced scope of Agricultural Credit Scheme. The definition and procedure of the scheme shall remain unchanged for all the participating banks.

Please acknowledge.

Encl. Annexure-A