The refinancing scheme launched by the banks in the flood-affected areas has yet to gain momentum as majority of the affected farmers and landowners are still unaware of it.
According to the State Bank’s Small and Medium Enterprises Finance Department (SMEFD) circular No 16 issued on November 2 in line with the government’s policy to revive agricultural activities and State Bank of Pakistan’s relief measures to improve access to financing in flood-affected areas, it has been decided to launch a concessional financing scheme through banks for agricultural production and working capital finance to farmers and Small and Medium Enterprises (SMEs) in the districts affected by recent floods.
Under the scheme, financing is being provided at affordable and concessional mark-up rates through banks and development finance institutions (DFIs) for which Rs10 billion has been allocated.
All categories of farmers including owners, owner-cum-tenants and tenants of the specified areas are eligible for agricultural loans under the scheme and banks shall provide agricultural loans to farmers as per their lending policy approved by their boards of directors and SBP rules and regulations.
Banks are encouraged to arrange for insurance of the loans provided under the scheme and Mandatory Crop Loan Insurance for five major crops such as wheat, rice, cotton, sugarcane and maize to avoid risk of losses due to natural calamities.
The circular says that tenure 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.
The banks may also provide short-term loans to SME borrowers, as defined in Prudential Regulations for SMEs in flood-affected districts. The borrowing limit of SMEs will be fixed by the banks keeping in view credit requirements, cash flows, repayment capacity, risk profile of the borrowers, etc, within the maximum limit prescribed under the prudential regulations for SMEs.
The refinancing under the scheme is being provided to the banks at five per cent per acre. The banks are also permitted to charge a maximum spread of three per cent per acre from the borrowers. Therefore, the credit to SMEs and farmers will be available at eight per cent per acre.
In case the borrowers fail to repay the loan amount and instalment as per agreed dates, the bank is 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.
The mark up will be paid on quarterly basis in cases of financing to SMEs while the mark up on agricultural loans will be paid on half-yearly basis. The banks will not take more than five working days in evaluating an application for credit under the scheme from the date of receipt of complete information from a borrower.
The circular said that where the request was declined, the banks would explicitly inform the applicant of reasons for rejecting the application.The banks shall obtain an undertaking from a borrower that the disbursed amount will be utilised strictly for the purpose it has been granted.
The banks will ensure fulfilment of requisite pre-disbursement formalities by a borrower through due diligence as per their own internal arrangements to avoid malpractice and misuse of funds under the scheme.
The refinance is provided on the basis of certification and 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.
The farmers, landlords and SMEs in all 24 districts of Khyber Pakhtunkhwa are allowed to avail the loan financing, but so far the number of those seeking loan under the scheme is negligible. An office-bearer of the Sarhad Chamber of Agriculture told The News that the scheme was not fetching enough response even from the eligible affected people. He said the scheme was not properly publicised and most of the affected people, who happened to be poor tenants, seeking loans and financing facilities were still unaware of it. He said the banks should publicise the scheme the way they propagate their own products so that the deserving flood-affected landowners and tenants could benefit from it.
No comments:
Post a Comment