Agriculture Financing

Agri Financing

Soneri Bank has designed various Agri Financing Products to facilitate the Farming community to avail agricultural credit on standardized terms to meet their short term as well as long term credit needs. SBP’s List of eligible items for Agri Financing will be followed at large for fund based & non-fund based facilities as described hereunder. Other items may be financed as per SBL’s Credit Manual that are not covered under Agri Manual. Brief introduction along with terms and conditions of the Agri Products offered by Soneri Bank are detailed below:

Farm Production Loan – Revolving Credit

Farm Production Loans are disbursed to meet the all type working capital requirement of sowing, producing, harvesting and marketing of the crops, vegetables, fruits, etc. This includes the cost of inputs to be incurred on the acquisition of the seeds, pesticides, fertilizers, other material and service charges etc. The limit would be extended with expiry of for 03 years & review of 01 year (short term loan) and shall be automatically renewed each year after fulfilling approval terms & conditions as prescribed in SBL Agri Policy and/or defined by SBP from time to time.

Salient Features

  • Credit availability on revolving basis.
  • One time documentation valid for three years.
  • Option to use limit as per requirement of the farmer.
  • Withdrawal and deposit of funds at the discretion of the customer.
  • Markup will be charged on amount utilized / withdrawn (outstanding debit balance).
  • Fresh Agriculture Loans to landladies shall be discouraged. However, renewal of all existing customers shall be continued provided the land lady is availing loan with her husband or some blood relation i.e. brother or father as co-applicant and the repayment behavior is regular / no overdue reported either in principal or markup.

Farm Development Loan

This is the term finance facility, repayable in installments that will be extended to farmers for purchase of machinery, equipment, installation of tube-wells, land improvement, etc. as defined in the list of eligible items of SBP. The Bank will allow financing for following purposes whereas customer can avail credit for more than one purpose;

Salient Features

  • Purchase of brand new thrashers & thrashing machine for all agricultural crops
  • Brand new Equipment for sprinkle/ trickle/drip irrigation system
  • Installation & repair of solar / general tube- wells/engines, open wells, Persian wheels, lift pumps, deep turbines/pumps, electrical installation including cost of power lines and transformers.
  • Construction of cold storages.
  • Cost of construction/ installation etc. of structures involved in tunnel & greenhouse technology for growth of horticultural produce.
  • Watercourse improvement alignment, lining, silt clearance, construction of modules and culverts, (where Directorate of Water Management is not functional), and construction of Pacca water-course.
  • The tenure of such financing should not be more than the useful life of Machinery/Equipment/Project as per Policy. It shall vary from 3 years to 5 years. A minimum of 20% of the cost of Machinery, Equipment/Project is to be invested by the borrower as equity.
  • Any other item required for development of the farm as per eligible list of items of SBP.

Non-Farm Working Capital Loan – Dairy Farming

The product is designed to support dairy farmers to help them meeting working capital needs of the business to increase productivity and ultimately earn profits. Credit under this category will be offered / extended to dairy farms / farmers for three years on revolving basis to meet working capital requirements of the business. The facility is designed to provide financing on easy terms with minimum documentation.

Non-Farm Development Loan – Dairy Farming

This is a term finance facility which will be extended to dairy farms / farmers for purchase of animals, assets & equipment (brand new only) and construction of animal sheds, fencing and enclosures at business place etc. the facility will be repayable in installments. The Bank will allow financing for following purposes whereas customer can avail credit for more than one purpose.

Non-Farm Working Capital Loan – Poultry Farming

Financing under this category will be extended to running poultry farms / hatcheries / feed mills on revolving basis, for three years, to meet working capital requirements of the business. The facility is designed to provide financing on easy terms with minimum documentation.

Non-Farm Development Loan – Poultry Farming

This is a term finance facility, repayable in installments, extended to established running farms for purchase of brand new assets / machinery / equipment, installation and construction of sheds, fencing and enclosures at business place. The Bank will allow financing for following purposes whereas the customer can avail financing for more than one purpose.

Non-Farm Working Capital Loan – Fish Farming

Financing under this category will be extended to farming community involved in Marine and/or In-land Fish farming on revolving basis, for three years, to meet working capital requirements of the business.

Non-Farm Development Loan – Fish Farming

This is a term finance facility, repayable in installments, extended to farming community involved is Marine and/or In-land Fish farming. The Bank will allow financing for following purposes where a customer can avail financing for more than one purpose.

Non-Farm Working Capital Loan – Cattle Farming

The product is designed to support cattle / meat farmers in meeting working capital needs of the business to increase productivity and ultimately earn profits. Credit under this category will be offered / extended to cattle farms / farmers for three years on revolving basis.

Non-Farm Development Loan – Cattle Farming

This is the term finance facility extended to individual farmers and running Cattle farms for purchasing brand new assets, construction of animal sheds, fencing & enclosures at business place and/or undertaking any capital expenditure for development purpose, etc. Loans extended under this category will be repayable in installments.

Value Chain – Contract Farmer Financing

Value Chain Contract Farmer Financing schemes are broadly defined as binding arrangements between banks and agri. value chain actors primarily large corporate / multinationals involved in producing, processing, aggregating, trading through which a farmer or group of farmers ensures supply of agricultural products to individual firms. Individuals/ farmers’ organizations/cooperatives who are engaged in agri. production activities and have sufficient knowledge, relevant experience and track record besides guarantee by marketing company shall be eligible to avail credit line under contract financing scheme.

Islamic Banking

Following Islamic facilities will be available to the customers. The approval process will be aligned with the conventional process flow, however interesting bearing or non Shariah compliant collateral would not be acceptable. Assets owned by the bank would be insured under Takaful, any deviation would be approved by the Resident Shariah board member.

Mustaqeem Tractor Loan

This is the term finance facility, repayable in installments, will be extended to farmers having minimum landholding of 5 acres and involved in crop production for purchase of Tractors & its implements to be used for the development of Agri. land. The farmer can purchase local and/or imported tractors from the open market. The loan amount will be based on the actual price of the tractor which is to be confirmed from the quotations provided by the farmer. Where required, ACO/BM will verify the quotations provided by the farmers and confirm prices of the tractor or implements from different vendors.

Ijarah

Ijarah means to transfer the usufruct of a particular property to another person in exchange for a rent claimed from him. The term Ijarah is analogous to the English term ‘leasing’. Here the lessor is called ‘mu’jir’, the lessee is called ‘musta’jir’ and the rent payable to the lessor is called ‘ujrah’.

Mustaqeem Murabaha Non-Farm Working Capital Loan – Poultry Farming

Financing under this category will be extended to running poultry farms / hatcheries / feed mills, for a maximum period of 180 days per Murabaha, to meet working capital requirements of the business. The facility is designed to provide financing on easy terms with minimum documentation.

Murabaha

Murabaha is a particular kind of sale where the seller expressly mentions the cost of the commodity purchased, and sells it to another person by adding some profit thereon. Thus, Murabaha is not a loan given on interest; it is a sale of a commodity for cash/deferred price.

Purpose
a. Purchase of feed and feed raw material, etc.
b. Vaccination, vitamin and other medication for poultry birds, saw dust, wood, coal, medicines, and water filter cartages.
c. Any other eligible item required to meet day to day expenses for running business.

Documentation
General Documents
Pre-Sanction

  1. Attested copy of valid CNIC
  2. Two passport size Photographs of the applicant and co-applicant (if any)
  3. Credit Application Form (Urdu/Sindhi/English Application as per format prescribed by SBP)
  4. Credit Proposal Form / Approval Sheet
  5. BBFS (as per format prescribed by SBP)
  6. Latest clean ECIB Report
  7. Copy of Passbook / Title Deeds / security documents/Cultivation Proof

Post-Sanction

  1. Duly accepted Offer Letter
  2. IB-7 (Agreement cum Guarantee)
  3. Charge/security creation in Bank’s favor as per practice in vogue
  4. Proper Utilization Certificate as per SBP criteria.
  5. Insurance as per SBP criteria

Mark-up Rate

Standard Mark-up Rate (SMR) on Agriculture finances shall be applicable @ TPMR+5.00% or 20% whichever is higher. Timely payment mark-up rate (TPMR) shall be applicable @ 6MK+5.0% (minimum filed may charge higher spread in TPMR duly communicated / accepted by the borrower) on amount disbursed (fresh), renewed and/or enhanced from all Agri. customers.
TPMR is the mark–up rate at which the bank wants to finance the customer, where timely payments / repayments of principal and mark-up are being made in accordance with the stipulated repayment terms / schedule.

Processing Fee

Processing fee on all Agri. loans will be charged and recovered from all borrowers at the time of Disbursement / renewal of the facility according to Schedule of Charges (SOC) of the Bank.

Basic Criteria of Application & Its Processing

  • Duly filled Applications on standardized format designed by SBP will be accepted from the farmers of the surrounding areas of Agri Designated Branches as listed on website of the Bank along with opening of relationship account.
  • The applicant should not be defaulter of any Bank while applying for agriculture finance/verified through Credit reports.
  • Bank can accept agricultural land as security on the basis of market value or Produce Index Units (PIU) value, after having the genuineness certificate of Agricultural Pass Book.
  • In case of non-availability of Pass Book, Agricultural Loans can be allowed against mortgage of any rural or urban property, earmarking of deposits, lien on Defence Saving Certificates (DSC), Special Saving Certificates (SSC), etc. as per Policy.
  • 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 as per Bank’s policy
  • Feasibility reports/cash flows must be prepared while Agri Financing especially for projects like land development, construction of godowns, development of orchards, nurseries, etc.
  • In case the applicant is land owner and is cultivating additional land as a tenant, Farm Production Loans 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/Policy of Bank after having prudent proof of lease cultivation & its valid agreements 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/securities/credit worthiness the sureties being offered to the Bank. Spot verification/Visit report must be submitted by the ACO/Branch Manager with each application
  • After approval of the Loans & its acknowledgment by the Farmer through offer letter, charge creation/security perfection will be done as per Bank’s policy along with charge documentation keeping in view the specifications of the approved Loans.
  • After security perfection, Loan limits will be allowed through AC maintained at Branch or by issuing the pay order in favor of the supplier as per approval & offer letter terms of the Agri Loans.
  • Timelines of approvals & disbursements of Agri Loans to be Followed as per Bank’s Policy & SBP guidelines.
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: arif.zia@soneribank.com

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
Email: arif.zia@soneribank.com

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
Email: mustafa.panhwar@soneribank.com

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