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KARACHI, Oct 14 (APP):The State Bank of Pakistan (SBP), Tuesday, launched a collateral free digital agriculture financing scheme for small and marginalized farmers as well as the farmers of unserved and underserved areas to raise the agricultural output and support rural uplift.
In line with the Prime Minister’s vision of transforming agriculture sector, the Agricultural Credit and Microfinance Department of the central bank introduced, through a circular, the implementation framework for the National Subsistence Farmers Support Initiative (NSFSI), now branded as “Zarkhez-e” with the tagline “Asaan Digital Zarai Qarza”, representing a new era of digital agricultural financing in Pakistan
Under the scheme, 75% of the financing will be extended in form of in-kind disbursement to ensure provision of essential inputs like quality seed, fertilizers, pesticides and diesel to the farmers from on boarded Agri-merchants while up to 25% could be disbursed in cash to meet other farming expenses. The farmers will also receive Agri-advisory services for improving their crop productivity and adopting sustainable cultivation practices.
The landowners and tenants holding up to 12.5 acres in Punjab and Khyber Pakhtunkhwa, 16 acres in Sindh and 32 acres in Balochistan are eligible to avail the scheme. Financing amount will be up to Rs 100,000 per acre while the maximum limit is set at Rs 1 million for landowners and Rs 500,000 for tenants.
To ensure a seamless and uniform rollout across the industry, SBP has developed standardized Process Flow and end-to-end digital solution in consultation with banks and MFBs for enabling the farmers to apply for agriculture loans at a centralized portal without visiting a bank branch. After necessary verifications and agronomic assessment through Land Information Management System (LIMS) the application will be forwarded to the bank chosen by the applicant for further processing.
The financing under NSFSI will have the 10% first loss coverage while the lender will also be entitled to an operational cost subsidy of Rs.10,000 per borrower for net increase in the number of outstanding borrowers.
Most of the Banks and Micro Finance Banks have already integrated their systems with the centralized portal and LIMS and have on-boarded the Agri-merchants, while the central bank has encouraged the others to complete their integrations and Agri-merchants on boarding processes at the earliest.
Another important feature of the scheme is life and crop insurance coverage as all farmers availing the loan under this initiative shall have life insurance coverage equivalent to the loan amount disbursed and outstanding while Crop Loan Insurance under Crop Loan Insurance Scheme (CLIS) will be mandatory for five major crops.