In line with
the Government of Pakistan policy for revival of agriculture
activities and SBP relief measures for improving access
to financing in flood affected areas, it has been decided
to launch a concessional financing scheme through banks
for agri. production/working capital finance to Farmers
and Small & Medium Enterprises (SMEs) in districts
affected by recent flood as notified by National Disaster
Management Authority (Annexure-
1).
Under the
scheme financing will be provided at affordable/concessional
mark-up rates through banks/DFIs for which Rs. 10 billion
has been allocated. The details of the Scheme are as
under:-
1.
Agricultural Production Loans to Farmers:
a.
Scope / Eligibility Criteria
i) Agricultural credit shall mean only farm credit
for meeting the production/working capital requirements,
as defined under the Prudential Regulations for
Agriculture Financing.
ii) All categories of farmers (owners, owner-cum-tenants
and tenants) of the specified areas will be eligible
for agricultural loans under the Scheme.
iii) Banks shall provide agri. loans to farmers
as per their Lending Policy approved by their Board
of Directors and SBP Rules & Regulations.
iv) Banks are encouraged to arrange for insurance
of the 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 calamities.
b.
Tenor and Size of Loans
i)
Tenor of the crop production loans and repayment
of the principal amount will be based on the cropping
cycle up-to a maximum period of one year.
ii) The borrowing limit of farmer shall be fixed
by the bank keeping in view credit requirements,
cash flows, repayment capacity, risk profile of
the borrower, etc.
2.
Short Term Loans to the SMEs:
a)
Banks may provide Short-Term Loans to SME borrowers,
as defined in Prudential Regulations for SMEs in Flood
Affected Districts.
b) Banks shall provide financing facilities as per
their lending policies approved by their Board of
Directors and SBP rules & regulations.
c)
Banks shall provide short term loans for working capital
requirements of SMEs for a maximum period
of one year.
d) The borrowing limits of SMEs shall be fixed by
the banks keeping in view credit requirements, cash
flows, repayment capacity, risk profile of the borrower,
etc. within the maximum limit prescribed under Prudential
Regulations for SMEs.
3.
Rate of Mark-up:
Refinance
under the Scheme shall be provided to the banks at
5.0% p.a. The banks shall be permitted to charge a
maximum spread of 3.0% p.a. from the borrowers, therefore
credit to SMEs/farmers will be available at 8.0% p.a.
4.
Grant of Refinance:
a)
The State Bank shall provide refinance in terms of
Sections 17 (2) (b) and (d) read with section 22 of
State Bank of Pakistan Act, 1956 as amended from time
to time.
b) Limits shall be allocated to individual banks under
this Scheme having branches involved in SME / agri.
lending in eligible areas. Interested banks/DFIs may
send their request for sanctioning of limit for current
financial year to Director, SME Finance Department,
within 7 days of issuance of circular separately for
SMEs and agriculture finance.
c) The banks can approach SBP-BSC (Bank) offices for
availing the refinance facility under the Scheme on Weekly Basis, once limits are approved
and communicated to the banks concerned.
d) Refinance shall be allowed to the banks by SBP
BSC (Bank), offices on submission of documents as
may be required by State Bank. The documents initially
required are attached herewith.
5.
Repayment of Loans:
a)
Principal amount of loans under the scheme shall have
to be repaid on agreed date between bank and the borrower
within a maximum period of one year.
b) However, if a borrower repays the loan amount,
in part or in full, before the due date(s), the banks
shall be under obligation to repay the amount(s) so
received within seven working days to the SBP-BSC (Bank), failing which fine for late
adjustment of loan will be recovered from the concerned
bank, at the rate specified by the State Bank.
c) The refinance granted by SBP-BSC, offices to the
banks shall be recovered within seven 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.
d) Mark-up shall be paid on quarterly basis in case
of financing to SMEs. However, mark up on agri. loans
shall be paid on half yearly basis.
6.
Other Terms and Conditions:
a) Financing facilities already extended and outstanding
shall not be eligible for refinance /debt swap.
b) Financing under the Scheme shall be subject to
compliance with all the rules and regulations including
Prudential Regulations for SMEs and Agriculture Financing.
c) 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.
d) The bank shall obtain an undertaking from the borrower
that the disbursed amount shall be utilized strictly
for the purpose it has been granted.
e) 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.
f) Refinance shall be provided on the basis of certification/confirmation
by the Internal Audit/ SME/Agri Head/Business Chief
of the financing bank that the loan is within the
terms and conditions laid down in the Scheme.
g) Financing under the Scheme shall be checked/verified
by SBP’s Banking Inspection Department (BID)/
SBP-BSC Bank to ensure that the same have been allowed
as per the terms and conditions of the Scheme.
7.
Fines:
a)
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 part thereof.
b) In case bank fails to deposit to the concerned
office of SBP-BSC the loans installment/amount received
from the borrower before the due date within seven
working days as mentioned in Para 5(b) 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.
8.
Above Scheme shall be effective from the date of issuance
of this Circular and shall remain valid only up-to October
31, 2011. However, outstanding refinance shall be recovered
on the maturity of respective loans.
Encl:
(i) Annexure-1 (ii)
Documents