Agriculture Financing

1. Farm Credit for Inputs (Production Finance):


The finance provided for purchase of inputs like seeds, fertilizer, pesticide, etc. as well as working capital finance provided to meet various types of expenses attributable to farming like wages, etc. is categorized as Farm Credit for Inputs. Such loans are self-liquidating with repayment occurring shortly after harvest from sale of the crop for which the loan was made. Maturities of such loans will coincide with the production cycle for the product being financed.

Application and Process:

  • Applications should be accepted in triplicate from the farmers of the surrounding areas accessible to the Branch. It is not necessary that the lands should also be in surrounding areas
  • All the columns of the finance application form need to be properly filled in. Date needs to be mentioned on top of application form (APPENDIX “P”)
  • A number will be allotted to each completed application form
  • The applicant should not be a defaulter of any Bank while applying for agricultural finance
  • Only one application for Production Finance will be entertained per farmer as per his genuine agricultural needs. Farmers availing credit facilities from other Banks are not eligible until they adjust their liabilities with other Banks and submit a clearance certificate to this effect
  • The applicant must possess computerized National Identity Card and one attested (both sides) photocopy of the same must will be retained at the Branch along with the finance application form
  • To avail agricultural production finance, farmer must provide copy of latest Khuasra. Girdawari and/or his Agriculture Pass Book, documents of rural/urban property or cash collateral/liquid security
  • In case of tenant farmer finance can be allowed against two sureties acceptable to Bank to the maximum of Rs.100,000/- (Rupees One Hundred Thousand Only) per farmer per year. However, total guarantee of one guarantor / person should not in any case exceed Rs.500,000/- (Rupees Five Hundred Thousand Only). Such loans in excess of Rs.50,000/- will be approved by the RFC
  • In the following cases an NOC need to be obtained from other banks in the locality to ensure non-availing of facilities simultaneously from other banks:
    • Where finance is being allowed against guarantee as basic security and agricultural land, rural/urban property is offered by the guarantor(s) as additional security and no collateral is being offered by the borrower directly
    • In cases where finance is being allowed against two sureties only, acceptable to bank
  • It is further clarified that where NOC is to be obtained, borrowers/customers should not be asked for the same. In such cases, NOC should be arranged by the concerned Branch directly from other Banks/Institutions
  • In case of security of Agricultural land under Pass Book System, charge is to be created on the land shown in Agriculture Pass Book to secure the finance, after verifying the genuineness of the Agricultural Pass Book
  • Bank can accept agricultural land as security on the basis of market value or Produce Index Units (PIU) value
  • In case the applicant is land owner and is cultivating additional land as a tenant, production finance can be allowed against Agriculture Pass Book for the total input requirement of the land being cultivated by him keeping in view the value of security. However, he will have to produce a copy of Chaser Girdawari/any revenue record for the land being cultivated by him as a tenant
  • In case of non-availability of Pass Book, agricultural finance can be allowed against mortgage of any property rural or urban, earmarking of deposits, lien on Defence Saving Certificates (DSC), Special Saving Certificates (SSC), etc.
  • On receipt of finance application, a thorough field investigation has to be carried out to ascertain the genuineness of borrower as farmer, genuineness of title of land/credit worthiness of the sureties being offered to the Bank. Spot verification report must be submitted by the AFO/Branch Manager with each application
  • The Branch Manager will interview the borrower to ascertain his actual finance requirement and repayment date of finance, keeping in view the harvesting time of the crop and cash availability with the borrower on harvest of the crop and cross match his verbal statement with that
  • While interviewing the borrower it may be ensured that instead of advising the farmer on the repayment time, the borrower should himself decide the repayment date, keeping in view the receipt of cash from his crop. However, this should commensurate with harvesting/marketing trend of other farmers in the area
  • The repayment date of production finance will be mentioned in the respective column of finance application form in the shape of an undertaking by the farmer

2. Farm Developmental Finance:


This finance is extended for making different types of improvements in the land including construction of godowns, etc., at the farm and for development of orchards, nurseries, etc. Such loans will be of long term nature to be allowed for a maximum period of 5 years. In such cases, minimum loan to value ratio of 90:10 is prescribed.

Application and Process:

  • Applications will be accepted in triplicate from the farmers of the surrounding areas of the Branch (APPENXIX “I’)
  • All the columns of the application form should be properly filled in. Date must be mentioned on top of application form
  • The applicant should not be defaulter of any Bank while applying for agriculture finance
  • The applicant must possess Computerized National Identity Card and one attested (both sides) photocopy of the same must be retained at the Branch along with finance application form
  • If any credit facility by other Banks exists on the piece of land to be cultivated against SBL credit, it will be adjusted first and clearance certificate will then be obtained from that Bank
  • After filling the form it needs the signature or thumb impression of the applicant affixed along with his personal account number maintained and the signatures/thumb impression verified by the branch
  • Bank can accept agricultural land as security on the basis of market value or Produce Index Units (PIU) value, after verifying the genuineness of Agricultural Pass Book
  • Feasibility reports must be prepared while financing for projects like land development, construction of godowns and development of orchards, nurseries, etc.
  • While allowing finance against rural/urban property or agricultural land, a minimum margin of 50% is to be retained on the basis of recent valuation of the property

Loan for the Purchase of Machinery/Equipment:

  • The machinery and equipment used for agricultural purposes at the farms include tractors, threshers, tube wells, etc.
  • The tenure of such financing should not be more than the useful life of machinery/equipment. It shall vary from 3 years to 5 years. A minimum of 20% of the cost of machinery/equipment is to be invested by the borrower as equity
  • Quotations from well reputed suppliers will only be accepted providing full details of machinery, equipment, implements and its accessories/spares, etc.
  • The equipment and machinery financed will remain insured at all times during the tenure of the loan
  • In case of tractor being financed, a Comprehensive Insurance cover will be obtained, and remain valid at all times, from an Insurance company which is on bank’s approved list
  • Bank’s hypothecation charge on the tractor has to be registered and recorded in the registration booklet, a copy of which is to be retained in the branch

Detailed Procedure for Tractor Financing:

Tractor is the key machinery in agricultural farm operations. A tractor is not only used directly for land preparation but is used in a number of farm operations through installation of different attachments to it which include sprayers, seed drills, land scrappers etc. It also works as a power generating tool in a number of cases like running of tube wells, threshers, fodder cutters, etc. Last but not least it works as transport vehicle attached to a trolley. Its multiple uses in agricultural operations have made it prime machinery for the agricultural sector.

  • The maximum tenure of livestock financing is five years (including of grace period, if any)
  • A detailed guideline for livestock financing circulated by the SBP under cover of Circular ACD No.1 dated 28`h August, 2006 is enclosed at (APPENDIX “J”)

3. Three Years Revolving Finance Scheme (RF):


In order to facilitate progressive farmers who require Production Finance for different crops grown during the year and other agricultural finances to fulfill working capital needs of farmer, a Revolving Finance Scheme has been introduced by State Bank of Pakistan. The scheme has been implemented by SONERI BANK LIMITED.

Salient Features of the Scheme:

Under the scheme a running finance limit will be sanctioned for a period of three years in favor of the bonafide farmer, keeping in view his credit requirements of one year for purchase of inputs for different crops grown by him during the year as admissible under SBP scheme.

Type of Inputs which will Qualify for Such Limits:

  • Seeds
  • Fertilizers & Gypsum
  • Pesticides including herbicides and weedicides
  • Hired farm labor
  • Hired farm power
  • Charges for purchase of diesel for tractor & tube well operation
  • Electricity expenses for tube wells
  • Fuel wood for curing of Tobacco
  • Water Charges for purchase of tube well water

Any other input admissible under SBP’s Supervised Agricultural Credit Scheme.

Assessment of Credit Requirements:

In order to assess credit requirement of a borrower, the total input requirements of the crops grown during the year on the land cultivated by the grower (own land i-leased land) shall be taken into account in consultation with borrower and keeping in view the guidelines provided under the SBP scheme.

Eligibility Criteria:

  • The scheme shall be applicable in all the areas throughout the country for all categories of farmers
  • Applicant must be an account holder of the branch
  • Total input requirements of the crops grown on land cultivated by the borrower (own land + leased land) and other agricultural finances required to fulfill working capital need of the farmer shall qualify for finance facility
  • Agri lands/property offered by the borrower as collateral should be free of charge of any other Bank/Institutions/Individual
  • The land of the borrower should be located in an area which can be supervised by the branch or the borrower should reside in the area where he can be contacted by the branch

Approval Procedure:

  • Applications for R/F facility shall be received by the branches on the usual agricultural finance application forms
  • For preparation of limit proposal standard formats used for agricultural finance limit proposal shall be used
  • Spot verification report of AFO on the prescribed format to be made as part and parcel of the limit proposal

Limit Amount:

  • The total input requirements of all the crops grown during a year will be calculated in consultation with the farmer and in accordance with SBP formula to arrive at the limit amount
  • Keeping in view one year’s genuine credit requirements of the borrower (for purchase of inputs) a three years running finance limit will be approved by Branch Manager/ACM/COBs/RFC as the case may be on the recommendations of AFO/Branch Manager
  • Limits exceeding the power of RFC shall be referred to the EFC
  • Before processing the limit, a spot verification report (on the prescribed format) has to be submitted by AFO, on receipt of finance application


a) Basic Security:

  • Basic security for such limits will be Bank’s charge on agricultural land of the borrower under Agri Pass Book system on the basis of PIU or market value of the land with minimum 50% margin. Other collaterals like mortgage of rural/urban property, bank’s lien on saving certificates bank deposits, etc. can also be accepted
  • In case the value of land is not enough to cover bank’s risk, other tangible security can be accepted to cover the finance
  • In case the value of land is not mentioned in the Agri Pass Book, the same should be got noted in the Agri Pass Book from Revenue Department

Other Securities/Collaterals Acceptable:

  • Rural/urban property with 50% margin on market value
  • Cash collaterals with 10% margin on realizable value
  • Against two sureties acceptable to bank in accordance with the powers delegated by the COK

Basic Documents to be provided by Borrower while Applying for Finance:

  • Copy of Computerized N. I. C (attested)
  • Original Agri Pass Rook or documents of other rural/urban property, Savings Certificates to be offered as collateral.
  • Copy of Khasra Girdawari of leased land being cultivated by the borrower

Following Documents are to be obtained before Disbursement of Finance:

  • Agreement cum guarantee 113-7
  • Charge Certificate issued by the Revenue Authority under Agri Pass Book System
  • Other charge documents (as the case may be)
  • Documentation will be done once in three years for the total period of finance
  • E-CIB report has to he obtained where finance amount is Rs.0.5 Million and above

Debt Servicing/Renewal:

  • Total limit is to be adjusted (cleanup) once in a year (principal + markup) so as to continue this facility for the next year
  • The Revolving Finance Scheme shall be valid for three years with one time documents, subject to clean up once a year. On cleaning the account on any date during the entire one-year period by the borrower, the limit shall be automatically renewed by the bank without any fresh document/request/application

Annual Clean-up shall Base on the Following:

  • Either through repayment of entire principal and mark-up once a year on any date fixed in consultation with the borrower


If total periodical credits in the account are equal to or more than the amount of limit availed during a year, the limit should be treated as regular/cleaned-up

  • The aggregate outstanding in the account during 12 months period should not at any point of time exceed the prescribed/sanctioned limit
  • Each limit shall be reviewed once a year. The review of limit may result in continuation of the facility, enhancement of the limit or cancellation of limit/withdrawal of the facility, depending upon the performance of the borrower
  • Regional Office will ensure annual review of finances allowed under three years Revolving Finance Scheme by collecting information from the branches on the prescribed format on regular basis (APPENDIX “I”)

Extension / Re-Scheduling:

When the bank has granted extension and/or re-scheduled the period of repayment on account of natural calamities affecting the farmers, the period for reckoning the status of operations satisfactory or otherwise would get extended. When proposed extension is beyond twelve months, the aggregate debts for which extension is granted would be transferred to a separate term finance account with stipulation for repayment in installments

4. Corporate Farming:

In addition to the Prudential Regulations prescribed for different areas of Agricultural Financing, the State Bank of Pakistan has added regulation R-26 and R-27 which specify Linkage between Financial Indicators and total exposure as well as the requirement of obtaining audited accounts and a different set of Basic Fact Sheet.

As a policy bank considers financing to agro-based industry and corporate farms under the policy and Prudential Regulations for Commercial and Corporate customers or SMEs as the case may be.

Mr. Muhammad Arif Zia
Head of Agriculture Credit Division
Soneri Bank Limited 2nd Floor, Al-Rahim Tower, I.I. Chundrigar Road, Karachi
Tel. # (+92) (21) 32458433
Email address:

Agriculture Credit Department (Central Region)
Mr. Muhammad Arif Zia
Head of Agriculture Credit Division
Soneri Bank Limited 90-B-C/II, Liberty Market, Gulberg-III, Lahore
Tel # (+92) (42) 35772282, 35772285-87
Fax # (+92) (42) 35772284

Isra University Branch
Mr. Ghulam Mustafa Panhwar
Regional Head Agriculture Credit
South Region-Sindh
ISRA University Branch, Hyderabad
Tel. # (+92) (22) 2032346
Fax # (+92) (22)2032323

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