By By our correspondent
Under the scheme which will be valid till 2012, the SBP will provide refinance facility to commercial banks at 6 per cent. The banks after charging 2 per cent maximum spread will lend at 8 per cent to the farmers.
It covers the affected districts of Swat, Lower Dir, Malakand, Upper Dir, Buner and Shangla in the NWFP and Bajaur Agency, Khyber Agency, Kurram Agency, Mohmand Agency, N Waziristan Agency, Orakzai Agency and S Waziristan Agency in FATA.
The SBP said it will share up to 50pc losses of banks against their agriculture production and working capital loans in a bid to encourage lending under the scheme. Banks, however, must continue monitoring the borrowers and ensure recovery of loans as per normal practice, it said.
The scheme is for all banks except for Zarai Taraqiati Bank, which is already availing similar facility. Banks are also encouraged to arrange for the insurance of loans provided under the scheme and mandatory crop loan insurance for five major crops including wheat, rice, cotton, sugarcane and maize to avoid risk of losses due to natural calamities.
It said that tenor of the crop production loans and its repayment will be based on the cropping cycle while for other farming activities working capital will be provided for a maximum period of one year.
There will be no maximum limit for borrowing by the farmers under the scheme. However, the borrowing limit of a farmer shall be fixed by the bank keeping in view credit requirements, cash flows, repayment capacity and profile of the borrower.
Under the scheme, yearly limits will be allocated to individual banks having branches involved in agriculture lending in eligible areas.