To facilitate farmers of affected areas of NWFP and FATA
for obtaining fresh loans from banks to resume agricultural
activities, it has been decided that banks except Zarai
Taraqiati Bank Limited (ZTBL) are allowed to obtain following
refinance facility against their agri. production / working
capital loans to the farmers of Swat, Lower Dir, Upper
Dir, Malakand, Bunner, Chitral and Shangla districts of
NWFP and FATA for the purpose of agricultural activities.
SBP shall share up to 50% of bonafide losses of banks
against the loans funded under the scheme. Details of
the scheme are as under: -
a. Scope / Eligibility Criteria
i) Agricultural credit shall be provided to the farmers
in affected districts/regions of NWFP and FATA (Schedule
1) under the Scheme.
ii) Agricultural credit shall mean only farm and non-farm
credit for meeting the production/working capital requirements,
as defined in Prudential Regulations for Agriculture Financing.
iii) All categories of farmers (owner, owner-cum-tenant
and tenant) of the specified areas will be eligible for
agricultural loans under the Scheme.
iv) Bank shall provide agri. loans to farmers as per their
credit policy and SBP regulations.
v) Banks are encouraged to arrange for the insurance of
loans provided under the scheme and mandatory crop loan
insurance for five major crops viz. wheat, rice, cotton,
sugarcane and maize to avoid risk of losses due to natural
b. Tenor and Size of Loans
i) Tenor of the crop production loans and its repayment
will be based on the cropping cycle. For other farming
activities working capital will be provided for a maximum
period of one year.
ii) There will be no maximum limit for borrowing by the
farmers under this Scheme. However, the borrowing limit
of farmer shall be fixed by the bank keeping in view credit
requirements, cash flows, repayment capacity, profile
of the borrower, etc.
c. Rate of Mark-up
Refinance under the Scheme shall be provided to the banks
at 6.0% p.a. The banks shall be permitted to charge a
maximum spread of 2.0% p.a. from the borrowers availing
credit under the Scheme.
d. Bank-wise Refinance Limits
i) Yearly limits shall be allocated to individual banks
under this Scheme having branches involved in agri. lending
in eligible areas.
ii) The limits shall be allocated for each fiscal year
from 1st July to 30th June, which will be reviewed on
iii) Applications for sanction of limits for each fiscal
year (July-June basis) shall be sent by the interested
banks to the Director, SME Finance Department, SBP latest
by 15th May each year to facilitate sanction of annual
limits at the earliest. For the current year the request
for sanction of limits may be submitted within 15 days
from the issuance of this circular.
e. Grant of Refinance
i) The State Bank shall provide refinance in terms of
Section 17 (2) (b) read with section 17 A (d) and section
22 of State Bank of Pakistan Act, 1956 as amended from
time to time.
ii) The banks can approach SBP-BSC (Bank), Peshawar for
availing the refinance facility under the Scheme on bimonthly
iii) Refinance shall be allowed to the banks by SBP BSC
(Bank), Peshawar on submission of documents as may be
required by State Bank. The documents initially required
are attached herewith.
f. Repayment of Loans
i) Principal amount of loans under the scheme shall have
to be repaid on the agreed date between bank and the borrower,
however, in case of crop production loans it may not be
later than days 60 days from the date of harvest of respective
ii) However, if a borrower repays the loan amount or its
installment, in part or in full, before the due date(s),
the banks shall be under obligation to repay the amount(s)
so received within fifteen working days to the SBP-BSC
(Bank), Peshawar failing which fine for late adjustment
of loan will be recovered from the concerned bank, at
the rate specified by the State Bank.
iii) The bank shall obtain an undertaking from the borrower
that the disbursed amount shall be utilized strictly for
the purpose it has been granted.
iv) To avail refinance facility the borrower is required
to submit application on simple paper along with D.P.
Note on prescribed format.
v) The refinance granted by SBP-BSC, Peshawar to the banks
shall be recovered within 15 days of the due dates as
reported to the office from the account of the banks maintained
with the respective office of the SBP-BSC (Bank). In case
the borrowers fail to make repayment of the amount of
loan/installment as per agreed dates, the bank will be
entitled to charge normal rate of mark up on such overdue
principal amount besides taking other actions to recover
the same as are incidental to such defaults. In no case
the liability of banks to pay/repay to SBP BSC, the principal
amount of refinance, or mark up or any other charges or
penalty thereon shall be dependent upon the recovery from
the borrower, nor shall such liability be affected by
any default on the part of the borrower.
vi) Mark-up shall be paid on half yearly/quarterly basis
g. Other Terms and Conditions
i) Financing under the Scheme shall be subject to compliance
with all the rules and regulations including Prudential
Regulations for Agriculture Financing.
ii) Banks shall not take more than 5 working days in evaluating
an application for credit under the Scheme from the date
of receipt of complete information from the borrower.
Where the request is declined, the bank will explicitly
apprise the applicant reasons for rejecting the application.
iii) Banks shall ensure fulfillment of requisite pre-disbursement
formalities by the borrower through due diligence as per
their own internal arrangements to avoid malpractice and
mis-utilization of funds under the Scheme.
iv) Refinance shall be provided on the basis of certification/confirmation
by the Internal Audit/Agri Head/Business Chief of the
financing bank that the loan is within the terms and conditions
laid down in the Scheme.
v) Financing under the Scheme shall be checked/verified
by our Banking Inspection Department (BID)/ SBP-BSC Bank
to ensure that the same have been allowed as per the terms
and conditions of the Scheme.
vi) Mandatory crop loan insurance for five major crops
viz. wheat, rice, cotton, sugarcane and maize. In addition,
banks are encouraged to arrange for the insurance of loans
provided for all other agri. production/ working capital
financing. In case of hypothecated stocks/ assets, they
should be comprehensively insured from reputed insurance
company or group of companies.
i) In case of violation of the terms & conditions
of the Scheme, the State Bank reserves the right to recover
the amount of refinance granted to the bank along-with
fine at the rate of Paisa 60 per day per Rs 1000/- or
ii) In case, bank fails to deposit to SBP-BSC, Peshawar
the loans installment/amount received from the borrower
before the due date within fifteen working days as mentioned
in Para f (ii) above, late adjustment fine will be charged
from the concerned bank at the rate of Paisa 60 per day
per Rs 1,000 or part thereof or prospectively at such
rate as may be announced by the State Bank from time to
i. Sharing of Bona-fide Losses
Bonafide losses incurred by the banks due to non-recovery
of an agricultural production/ working capital loan made
under the scheme, as proved to the satisfaction of the
State Bank of Pakistan, and fulfill the following conditions,
would be guaranteed upto 50% in terms of Section 17D(2)
of the State Bank of Pakistan Act:-
i) Loans have been given strictly in accordance with the
provisions of the Scheme and in accordance with SBP Regulations
ii) All formalities required prior to the sanction and
disbursement of loans have been meticulously observed;
iii) The bank shall exercise the due diligence in recovering
dues in all possible manners in respect of any guaranteed
account as it might have exercised in the normal course
if no guarantee had been provided.
iv) All efforts for recovery of loans including legal
remedies viz. filing of recovery suit have been taken
by the bank
v) The payment of guarantee claim by SBP to banks shall
not in any way affect their right to recover the defaulted
amount from the borrowers. The banks shall exercise all
the necessary precautions and initiate such actions as
deem necessary for recovery of the defaulted amount.
vi) The bank shall promptly repay the amounts subsequently
recovered from the borrower to SBP under the guarantee
j. Procedure for Claims
Claims of bonafide losses in respect of agricultural production/
working capital loans granted by banks under the scheme
and have been classified as loss under the PRs for Agricultural
financing shall be submitted to Agricultural Credit Department,
State Bank of Pakistan on annual basis i.e. by 31st January
each year duly verified/ certified by the bank’s
Internal Audit on the format given below:-
amount of Production/ Working Capital Loans Disbursed
During the Year
of Outstanding Loans (Principal) Classified as Loss
of Loans (Principal) Considered as Absolutely Unrecoverable
claims of losses against absolutely unrecoverable loans
will be reimbursed by SBP subject to post verification
by Banking Inspection Department in their regular On-site
Inspection / specialized inspection of the bank.
2. Above Scheme shall be effective from the date of issuance
of this Circular and shall remain valid only up-to December
Encl: (i) Schedul-1 (ii) Documents