Agriculture Financing

Agri Financing

Soneri Bank has designed various Agri Financing Products for the Farming community to avail agricultural credit facilities on given 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 provision of fund based & non-fund based facilities as described hereunder:

Farm Production Loan – Revolving Credit

Farm Production Loans are disbursed to meet the working capital requirement of sowing, producing, harvesting and marketing of all crops including vegetables, fruits etc. This covers the whole cost of inputs to be incurred on acquisition of seeds, pesticides, fertilizers, other material/service charges etc. The facility would be allowed for a period of 03 years on revolving basis as advised by SBP with annual review upon completion of one year of relationship.

Salient Features

  • 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  • Markup will be charged on amount utilized / withdrawn (outstanding debit balance).

Farm Development Loan

This is a 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. Farmers can avail the Facility with below key points;

Salient Features

  • Facility may be allowed for Purchase of brand new thrashers, other Agri machines like plough etc.
  • For purchase of Brand New Equipment for sprinkle/ trickle/drip irrigation system
  • Installation 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 7 years. A minimum of 30% 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 for meeting the working capital needs of the Dairy Farming Business to increase productivity/profits. Credit under this category will be offered / extended to dairy farms / farmers for a period of three years on revolving basis with annual review after completion of one year of relationship. The facility has the same features as described in Farm Production loans.

Non-Farm Development Loan – Dairy Farming

This is a Term Finance Facility which may be extended to dairy farmers for purchase of animals, assets & equipment (brand new only) and construction of animal sheds, fencing and enclosures etc. The facility will be repayable in installments with 3 to 7 years Tenor. Loan amount will be 70 % of the actual cost with 30 % equity of the Farmer.

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 as allowed in Farm Production Loans.

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 facility will be repayable in installments with 3 to 7 years Tenor. Loan amount will be 70 % of the actual cost with 30 % equity of the Farmer.

Non-Farm Working Capital Loan – Fish Farming

Financing under this category will be extended to farming community involved in Marine and/or Inland Fish farming 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 as allowed in Farm Production Loans.

Non-Farm Development Loan – Fish Farming

This is a Term Finance Facility extended to farming community involved is Marine and/or In-land Fish Farming. The facility will be repayable in installments with 3 to 7 years Tenor. Loan amount will be 70 % of the actual cost with 30 % equity of the Farmer.

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 with features like Farm Production Loans.

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. Loan amount will be 70 % of the actual cost with 30 % equity of the Farmer.

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 Agri Facilities will be available to the customers in selected Islamic Branches of Soneri Bank. 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 a Term Finance Facility, repayable in installments 3 to 7 years & will be extended to farmers having minimum landholding of 5 acres for purchase of Tractors/implements. The farmer can purchase local and/or imported tractors from the open market. The loan amount may be 70 % of actual price of the tractor which is to be confirmed from the quotations provided by the farmer.

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
 
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

Agriculture Finance is allowed @ 06 Month KIBOR+5.00% subject to change as advised by the management time to time & TPMR by the 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 & Late Payment Charge

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

  • Receipt of duly filled Loan Application on SBP designed format from the farmers of the surrounding areas of Agri Designated Branches as listed on Bank’s Website along with opening of relationship account.
  • The applicant should not be defaulter of any Bank while applying for agriculture finance/verified through Credit reports of SBP/other Banks.
  • Photos/Security details/Cultivation proof/Gardawri/Form –VII to be provided by the Farmers as per Policy.
  • After receipt of application, a thorough field visits/investigation will be carried out to ascertain the Credit Worthiness of the Farmer, genuineness of title of land/securities offered to the Bank.
  • Bank can accept agricultural land as security on the basis of Produce Index Units (PIU) value, Market Value (Average Sale Value) along with 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.
  • 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.
  • Proposal is processed by the Branch for approval of the authority as per SBL’s Policy.
  • After approval, its acknowledgment by the Farmer through offer letter will be arranged followed by charge creation/security perfection/other charge/Legal documentation as per Bank’s policy for disbursement of Facilities.
  • Timelines of approvals & disbursements of Agri Loans to be Followed as per SBP as well as Bank’s Policy.
  • Insurance Cover for the Disbursed Facilities will be arranged as advised by SBP from time to Time.
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. Khaleeq Ur Rehman
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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