Circulars/Notifications -  
 AC&MFD Circular No. 01 0f 2016
January 06, 2016 


The Presidents
All Banks/Specialized Banks/Microfinance Banks

Dear Sir /Madam,

Credit Guarantee for Small and Marginalized Farmers (CGSMF)


With a view to enhance access of small and marginalized farmers to formal credit, State Bank is pleased to launch the Credit Guarantee for Small and Marginalized Farmers (CGSMF) with the funding support of Government of Pakistan.

2. The CGSMF will provide risk sharing to Participating Financial Institutions (PFIs) against their collateral free lending to small & marginalized farmers. All farmers cultivating up to five acres of irrigated and ten acres of non irrigated land shall be eligible under the Scheme. CGSMF will share 50% of the losses on the outstanding loans (Principal only) to small and marginalized farmers. The incidence of default shall be declared after the loan is classified as “Substandard” under the relevant Prudential Regulations.

3. The Scheme would provide an opportunity to PFIs to explore the financing potential in this underserved market segment which constitutes majority of the farming community. Banks are advised to develop specific financing products and align their business models to meet financing needs of small & marginalized farmers on a sustainable basis.

4.         The Scheme will be applicable across the whole country including Azad Jammu & Kashmir, FATA and Gilgit-Baltistan. Credit guarantee limits will be allocated to all banks involved in agricultural financing. Non agri. lending banks are also encouraged to approach Agricultural Credit and Microfinance Department for allocation of guarantee limits in this regard.

5.         The Credit Guarantee Scheme, Standard Operating Procedures (SOPs) and the reporting formats are enclosed as Annexure 1, 2 and 3.

Encl: As Above

Annexure 1: Credit Guarantee for Small and Marginalized Farmers (CGSMF)
Annexure 2: Standard Operating Procedures (SOPs)
Annexure 3: Reporting Formats


Yours faithfully,


( Noor Ahmed )
Head of Department

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