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Rural Finance in Pakistan

This presentation is about Financial Support of small farmers in Pakistan to reduce poverty nad ensure food security under National Program of Food Security & Productivity Enhancement of Small farmers (Crop Maximization Project-II) Agriculture Department, Government of Pakistan.

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Rural Finance in Pakistan

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  1. Financial Support of Small Farmers

  2. Competitive Features • Credit needs of the farmers at their doorsteps. • Efficient, fastest and cheaper lending procedure. • Simplified documentation. • Timely disbursement. • Transparent services. • Focus on small farmers. • Lowest Mark Up • Provision of Timely Inputs • Packaging credit with technology and appropriate marketing of inputs and outputs. • Mobile Banking

  3. Defining Target Clientele Small Farmers: • Having land less than 20 Acres. • Actually cultivating land i.e owners/tenants • Socially excluded • Geographically disenfranchised • Away from socio-economic centers • Live in calamity - prone areas.

  4. Conceptualizing Village Organization

  5. Financing Policy & Procedure • Who Can Borrow? Only members of registered VO can borrow. • Documents Required? • Loan Application Form • Guarantee of Two Members • Post dated Cheque of any commercial bank. • Affidavit stating timely recovery of loans. • CNIC copy and photograph. • LOAN IS ISSUED IN THE FORM OF INPUTS ONLY

  6. Financing Policy & Procedure ….. • Procedure: • Loan applications are submitted to VO secretary. • Credit committees make technical and social assessment of loanees. • VO Secretary calls a meeting of executive body, in which loans are approved in the Presence of Credit Officer and Agriculture Officer concerned. • Purchases of inputs demanded in loan applications is made from the market at the lowest price ensuring collective marketing benefit. • VO also secures a pro-note and resolution from executive members before the issuance of check.

  7. Financing Policy & Procedure ….. • Service Charges 10 % per annum • Credit Limit: • For Kharif Crops: Rs. 8000/ Acre • For Rabi Crops: Rs: 6000/Acre • Loan Time Period • For Production Loans Maximum 6 Months • For Small Business: Maximum 2 Years

  8. A F B E C D Security Requirements • Two Guarantors • Jointly Group Liability • Post dated Cheque • Having immovable property barred with Revenue Department. • Affidavit from each member.

  9. Measures for Recovery • Proper Follow Up • Periodical Loan Recall • Discount in service charges for Early Recovery • Acceleration of repayment from guarantor • Legal proceedings under cooperative Act. • Help from Revenue Department.

  10. Establishment of Revolving Fund • Targets • Achievements • Establishment of Revolving Fund ( 2 – 4 million) in each project village, for production loans. • Funds for Small Business/IDIs @ 10 IDI’s per Village. • Matching grant against VO savings for establishing SFBC. • 80% grant for purchase of implements at village level. • 18 VOs have partially received revolving fund amounting Rs. 14.33 Million • Only two VO’s have got partial grant for the establishment of implements.

  11. Progress Review of Financing Revolving Fund Special Saving • Production loans amounting Rs. 9,689,038/- has been disbursed for Rabi 2010-11 benefiting 373 members of 15 VOs. • 100 % recovery was made on production loans for Kharif 2010 of Rs. 8,550,702/-. • A profit of Rs. 348,000/- was earned as services charges on loan issued for Kharif crop. • An amount of Rs. 240,000/- has been collected as share money from 2390 members of 55 VOs. • Eight VOs have invested their share money amounting in Small Farmer Business Center.

  12. Outreach (Rabi 2010-11) • Total loan disbursed: Rs. 9,689,038/- • Total members Benefited: 373 • Total VOs covered: 15 • Total area for which loan issued: 1900 Acres • Recovery Date: 15 May 2011 • Amount Recovered: Rs. 98050/- • Inputs Provided: • DAP 1427 Bags Urea: 4988 Bags • SSP 80 Bags Potash: 22 Bags • Diesel: 3808 Liter Weedicides: 38 Liter

  13. Record Keeping • All VOs are liable to maintain record as per cooperative Act 1925 that includes Cash Book, Ledger Book, Minutes of Meeting Register, Membership Register, Stock Register, Bank receipts etc. • VO office bearers have been provided trainings for record keeping. • All necessary guidance is provided to VO office bearers to maintain record properly

  14. Extra Credit Services • Our Service is Beyond Savings and Loan. • Develop First Then Follow By Loan. • Assist farmers facing occupational problems • Re-lending to members • How to reduce cost of production, Living expenses, Farming tools & techniques. • How to improve farming productivity etc. • Farmers’ Coaching and Training

  15. Lessons Learnt from Experience • Issuance of loans on need basis only. • Linkages with Stakeholders • Close Liaison with Farming Community • Guidance to the Farmers/ Borrowers • Training & Awareness • Rural Deposit Mobilization and Fund Based Services

  16. State of Affairs • Funds are not provided as promised to the farmers which creates anarchy among them. • Per acre credit limit needs to be enhanced keeping in view the input prices. • Diesel may also be treated as input and loans may be issued for purchase of diesel also. • Sugarcane is the major crop of most project villages so loans for sugarcane crop may also be initiated. • As per agreement NBP has not yet calculated any profit on the amounts deposited into VO accounts despite of several written communications.

  17. Thank you M. Irfan Arshad Cell No: +92(300) 6732379, Credit & VO Help Officer, Rahim Yar Khan

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