-presentation for sbp internship program

8/16/2019 -Presentation for SBP Internship Program

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1

By

Muhammad Nadeem KhanzadaJoint Director

Agricultural Credit DepartmentState Bank of Pakistan


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Agricultural Credit

Agriculture Credit Department

2


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Agricultural Credit

3

Banking Cluster

Banking Supervision Group• Banking Inspection

• Offsite Supervision &Enforcement

Development Finance Group• Agriculture Credit• SE !inance• icro !inance• Infrastructure & "ousing !inance

Banking Policy & Regulations

Group

•Banking #olic$ & %egulation

•Banking Surveillance

•Consumer #rotection

•Islamic Banking


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Agricultural Credit

AC' (ision

)o transform AC' into a professional andd$namic %ural !inance Support 'epartment*

full$ e+uipped to pla$ a leading role in

development of a sound* sta,le and ro,ust

agriculture and rural finance sector in

t-e Countr$.


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Agricultural Credit

Key Functions of the

Department

• )o operate as a focal point in SB# for allagriculture and rural finance policies* programsand pro4ects

•)o formulate agriculture & rural finance policiesin consultation it- stake-olders to ensureade+uate flo of institutional credit in ruralareas

• )o liaise it- !ederal and #rovincial Agriculturaldepartments and researc- institutes on allagri5rural finance issues* policies and pro4ects.


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8/42 Agricultural Credit

8

Organiational !tructure

I. Agriculture Credit Estimation & )argetonitoring 'ivision

I. Agriculture !inance #olic$ 'ivision

II. Coordination and Services 'ivision



Agriculture Credit "stimation

& #arget $onitoring Di%ision

9

• )o organie periodic ACAC meetings• Sanction5monitoring of Agriculture Credit line

5repa$ment sc-edule of ##CB:

• onitoring SB# credit lines outstanding against ;)B:

• Allocation of indicative agri. credit dis,ursementtargets to ,anks

• )o collect periodical agriculture credit data from,anks and financial institutions



• )o settle reim,ursement claims of ,onafidelosses of five ,ig commercial ,anks

• Enforcement of Inspection findings5

recommendations relating to agriculturalcredit

• 'isposal of Assem,l$5Senate +uestions

1<

Agriculture Credit "stimation &

#arget $onitoring Di%ision



• )o process +ueries* reference* e=ceptions etc.on Agrifinance policies* sc-eme #rudential%egulations etc. on Agrifinance

• )o organie +uarterl$ meetings it- Agri. Credit"eads of t-e ,anks

• )o liaise it- inistr$ of !inance* I>!A:*#rovincial Agricultural and :ivestock

'epartments to identif$ t-e ke$ issues andc-allenges and sector understanding of ma4orinitiatives 5 pro4ects to address t-e same

11

Agriculture Finance

Policy Di%ision



Pakistan’s Scenario

1212



Percentage Distriution of GDP



Land Holdings

1

'"(trapolated

1



CROP P)*+AB !,*D- *.FP BA/OC-,!#A* PAK,!#A*

Food Crops 011231 456736 414536 76135 4890531

Cash Crops 146030 91530 4:831 :13: :82837

Pulses 445138 48838 5235 7937 4:2:37

Oilseeds 15432 14437 8037 1737 61637

Condiments :734 48736 4738 :130 88030

;egetales 8:237 1634 :637 1935 15139

Fodder crops 828634 85037 42031 :838 8::934

All fruit 19536 4173: :539 8:735 94:35

Cropped Area 4561139 174:32 465630 42943: 8120638

Area )nder Crops By

Pro%ince 8227



Financial Inclusion

in Pakistan is Low

1

!ource? Access to Finance !ur%ey

)-e!ormall$Served

)-e !inanciall$ E=cluded

)-e !inancial arket 'evelopment !rontiers

)-e Informall$ Served



Agriculture

Finance

16



18

Rural and AgriculturalRural and Agricultural

FinanceFinance

Agriculture financing is

defined as pro%ision ofcredit for de%elopment of

agriculture



19

Relationship of AgriRelationship of Agri

and Rural Financeand Rural Finance

FinancialSector



Agri. Finance

Market

Crop !ector. million farm -ouse-olds3.8 million or /8? farmers it- up to /

acres of land -olding

1.9 million or 28? of farmers it- moret-an / and up to 12./ acres of land-oldings



Agri. Finance

Market

*on



22

Oeriew of AgricultureOeriew of Agriculture

!redit!redit


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Agricultural Credit

Speciali"ed #anks

$

%arai &ara'iati #ank Ltd.

$

un(a) roincial !ooperatie #ank Ltd.

$

Microfinance #anks

!o**ercial #anks

+,Os-MFIs

Infor*al !redit roiders

23

Sources of

Agricultura

Financing

23


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Agricultural Credit

Agricultural

Financing

Far* !rop/ Sector !redit

$

roduction LoansD#urc-ase of inputs like seed* fertilier* pesticides*

ater* electricit$* fuel* la,or* etc.

$

0eelop*ent Loans D#urc-ase of agri. implements* mac-iner$*

tractors* -arvesters* t-res-ers* land leveling implements* construction

of ater courses* drip & sprinkle irrigation s$stems* etc.

2


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Agricultural Credit

Agricultural

Financing

&1pes of +on-Far* +on-!rop/ Sector

!redit

$

2orking !apital or S-ort )erm Credit for purc-ase of inputs

and da$ to da$ e=penses ,ased on t-e activit$ and ,usiness c$cle

$

Long &er* !redit for construction of infrastructure* purc-ase

of mac-iner$* cold storages* silos* godons* ve-icles* etc.

2/


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Agricultural Credit

Agricultural

Financing

+on-Far* +on-!rop/ Sector !redit for

$

Liestock

$

Fisheries

$

oultr1

$

Horticulture

$

Sericulture

$

Apiculture

$

Forestr1

$

Floriculture

2


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Agricultural Credit

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!urrent Position of

Agri !redit• In addition to five ,ig ,anks DAB:* "B:* CB* >B# &

B: and to specialied ,anks D;)B: & ##CB:* 1domestic private ,anks are ,eing assigned indicativecredit targets.

• 'is,ursement -as increased from %s 39 ,illion in !F


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Agricultural Credit

Seg*entation of

#anks’ Adances in 3

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Agricultural Credit

Agricultural !redit &argets

Achiee*ents

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Agricultural Credit

!s" #n million$

Commercial Banks %&B' Cooperati(e Banks &otal

)earAmount

Share intotal *$ Amount



+,-+.-/ 01 2-"/ 3, 3/"0 ++,

+,-/.-3 02 /0", +2, 4-"1 5/ +5"/ /,-

+,,,.11 ,63+3 /3"4 /565/5 2+"4 46,4+ +4"1 3,620-

/111.1+ +/6144 /2", /-62+1 2+"2 46+/5 ++"5 556-0,

/11+.1/ +061-, 7 35"4 /,6+10 44"4 46/-5 +1"+ 4/652+

/11/.13 /56+25 7 5+"1 /,6/-1 5,"- 46504 77 ,"3 406,+,

/113.15 346,5, 7 50", /,6,33 51"- -6425 77 +1"3 -36552

/115.14 236-+- 7 40"2 3-6510 35"5 -621- 77 -"1 +106-3/

2005-06 83,990 * 61.1 47,594 34.6 5,889 ** 5"3 137,474

2006-07104,36

9 * 61.8 56,473 33.4 7,988 ** 5"- 168,830

2007-08138,69

0 * 65.6 66,939 31.6 5,931 ** /"0 211,560

2008-09152,29

2 * 65.36 75,139 32.28 5,579 ** /"3, 233,010

78 #ncludes Domestic Pri(ate Sector Banks

!o*paratie Role of !o**ercial #anks4

%L And !ooperatie #anks in Agri !redit

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Agricultural Credit

31

roince-wise Agri.

!redit

Billion !upees$

Pro(ince

9) /110.1, 9) /11-.10

&argetsDis:urs" &argets

Achie(ed

* Share

in &otal&argets

Dis:urs" &argets

Achie(ed

* Share

in &otal

Pun;a: +,4"1 +,2"+ +11"2* 05"+* +42"1 +-2"5 ++3"+* 03"5*

Sindh 34"1 /-"2 -0",* ++",* /0"1 /5"- 00"+* ++"-*

N


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Agricultural Credit

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!uper%ised Agricultural Credit !cheme3 Re%ol%ing Credit !cheme3

Prudential Regulations for Agri Financing3

Guidelines for /i%estock Fisheries & Poultry Financing3

Financing !cheme for !mall Farmers Guidelines for ,slamic Agriculture Financing

Crop /oan ,nsurance !cheme

*ational Agriculture ,nsurance !cheme

"stimation of Agricultural Credit Reuirements Per Acre Agri3 Credit /imits

,ntroduction of Pilot Proects and One .indoE Operation

#raining and Capacity Building Programs for Banks

Policy Adeuacy and AEareness Programs

SBP Policies, RegulationsSBP Policies, Regulations

& Sce!es on "g#icultu#al& Sce!es on "g#icultu#al

$#e%it$#e%it


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Agricultural Credit

5nder the sche*e credit is proided for agri.

production or working capital with the following

features6 -

$

Reoling credit li*it for three 1ears with one

ti*e docu*entation

$

One ti*e sanction7approal of loan li*it

$

Facilit1 for *ultiple withdrawals4 deposits and

partial repa1*ents

$

erfor*ance )ased auto*atic annual renewal

$

!redit li*its )ased on si"e of land holding4 cash

flows and collaterals

$

Loans upto Rs 89949997- around 5S : ;49997-/

can )e financed on personal sureties

$

Markup is charged on outstanding loan a*ount4

'uarterl1 or half 1earl1

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Reoling !redit Sche*e

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Agricultural Credit

Liestock contri)utes around >3 national ,0 . akistan is the

>3 of )anks’ agri. loan dis)urse*ent. #anks

are financing for dair1 and *eat far*ing

re'uire*ents including6

$

2orking !apital Financing for the purchase and

plantation of ani*al fodder4 feeds4 feed *i?ing

*achines4 accination4 ita*ins @ other *edications4

artificial inse*ination4 la)or4 electricit14 fuel4 etc.

$

&er* Finance for purchase of *ature *ilk 1ielding

)uffaloes4 cows4 @ goats4 replace*ent of e?istingani*als4 *ilk storage chilling tanks4 refrigerated *eat

storages4 esta)lish*ent of slaughter houses4 etc.

$


*onthl14 'uarterl1 or half 1earl1

3

Liestock Financing

3


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Agricultural Credit

akistan has a coastline of >989 k* and a total

areas of 9.8 *illion s' k* of *arine and 9.9B

*illion s' k* of inland waters consisting of

riers4 strea*s4 canals4 etc. Fisheries sector is

proiding lielihood to a)out C=D4999 fisher*en

and al*ost )illion annuall1.

&1pes of Financing

$

2orking !apital Financing for Marine and Inland

Fish Far*ing7!apture Fisheries

$

&er* Financing for Marine and Inland Fish

Far*ing7!apture Fisheries

$


*onthl14 'uarterl14 half 1earl1 or 1earl1

3/

Fisheries Financing

3/


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Agricultural Credit

akistan is a *a(or producer of fruits @

egeta)les with >9;9 *illion hectares

deoted for their cultiation.

H .orking Capital Financing

• )o meet da$ to da$ e=penses of -orticulturists* ,anks can provideorking capital finance on revolving ,asis to cover folloingitems J

• Seeds5 rootstock* Kater HC-arges* !ertiliers* #esticides* :a,orc-arges * diesel & engine oil * tilit$ ,ills* Storage* )ransportation*arketing* @rading* #acking and #rocessing ,$ farmers etc

H#erm Financing• )-e term finance facilities could ,e provided for t-e folloing

purposesJ

• )ractors* !arm implements* )u,eells* Orc-ards &>urseries etc

3

-orticulture Financing

3


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Agricultural Credit

oultr1 is an i*portant su)-sector of agriculture

pla1ing a significant role in the national econo*1

)1 contri)uting towards food securit14 reducing

pressure on de*and for *utton and )eef and

earning of foreign e?change. Around >.>3 share in

,0 4 .8 *illion

people connected with this field.

H.orking Capital Financing

• )o meet da$ to da$ e=penses of poultr$ sector including purc-ase offeed* ,irds5 da$ old c-icks* feed ra material* vaccination* vitamin* sadust* ood* coal* medicines* ater filter cartages* utensils for poultr$,ird feed* etc.

H#erm Financing

• )-e term finance facilities can ,e provided for medium to long termcredit needs for construction of ,roiler* la$er* ,reeder & -atc-er$ farmsand feed mills* tu,e feeders* ,reeder eggs storage refrigeration plants*slaug-tering & de feat-ering mac-ine* etc.

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Poultry Financing

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Agricultural Credit

A)out *illion )orrowers are )eing financed )1 for*al

sector against total far*er’s population of ;.; *illion.

Ma(orit1 of the countr1’s far*ers i.e. B


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Agricultural Credit

&here has alwa1s )een a great de*and fro*

agricultural custo*ers to hae Isla*ic financing

products for agriculture sector. &he ,uidelines on

Isla*ic Financing for Agriculture has )een issued to

facilitate I#Is to deelop their own Shariah co*pliant

products for financing to agriculture.

H #ypes of ,slamic Financial #ransactions

•#rade ased mode of financing It means providing finance t-roug- trading of goodsand commodities. a4or modes are %ABA"A* SAKAA"* SA:A and IS)IS>A

H Rental ased mode of financing under t-is mode of financing* ,ank purc-asesan asset and -ands it over to t-e customer on rental ,asis. I4ara Dleasing is t-eonl$ t$pe of rental ,ased mode of financing.

•Participatory mode of financing t-is mode of financing is ,ased on t-e ,asic t-emeof participation in profit and loss. ain products are S"A%ALA* 'II>IS"I>@S"A%ALA* 'A%ABA* SAMA)* ;A%ANA and @"A%ASA

39

,slamic Financing for Agriculture

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Agricultural Credit

+ational !rop

Insurance Sche*e• After successful implementation of mandator$ Crop :oan

Insurance Sc-eme* @overnor* SB# formed a )ask !orce on>ational Agricultural Insurance Sc-eme D>AIS

• )-e )ask !orce comprised of e=perts in t-e field and ot-er@overnment & private sector departments

• After detailed deli,erations and revie of international ,estpractices & related information a >AIS as developed tomitigate t-e risk of losses of non ,orroer farmers in case ofnatural -aards and calamities. Implementation of >AIS ill

not onl$ safeguard t-e interests of farmers* ,ut ill also save-uge amount of funds spent ,$ t-e @overnment of #akistan int-e s-ape of relief to t-e farming communit$ affected ,$natural calamit$.

<


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Agricultural Credit

• "ig-er deliver$ cost

• "ig-er >#:s

• Cum,ersome loaning procedures of ,anks and revenuedepartments

• Circumstantial defaults caused ,$J H :o productivit$

H Inade+uate marketing s$stem resulting in loer incomes

• "istorical tendenc$ for illful defaults nurtured ,$J H 'ifficult disposal of collateral5securit$

H #olitical considerations promoting default culture H Ineffective implementation of legal frameork

H :ack of cooperation on t-e part of t-e provincial revenue departments

• :imited institutional capacit$

• :ack of specialied staff

Issues in Agri. Financing

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#hanks

-presentation for sbp internship program

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