3. Group Members
M Afzal 10
Noman Aslam 27
Saqib Ali 33
Zohaib Hassan 38
Zulfiqar Nazir 39
4.
5.
6. What is Credit?
According to Samuelson
“ Credit is the use of someone else’s funds in
exchange for a promise to pay with or without
interest at a later date”
“ Farm Credit or Agriculture Credit is the count of loan or
Credit obtained form any source for the promotion &
development of Agriculture”
8. Classification of Agriculture Credit
1. Short Term Credit:
Provided for one year, purpose is for purchasing of
fertilizers, pesticides etc.
2. Medium Term Credit:
Provided for one to five years, Purpose is purchasing of
spry machines or drainage improvements etc.
3. Long Term Credit
provided for a period exceeding five years, purpose for
purchasing tractors, harvesting machines & install of tube
wells/ agriculture land etc.
9. Sources of Agriculture Credit
Non-Institutional or Informal Sources
Village Money Lenders
Friends & Relatives
Landlords
Institutional or Informal Sources
Zarai Taraqiati Bank Limited ( 1961, only agri credit, low interest)
Commercial Banks ( More formalities, High interest/ ZTBL)
Cooperative Societies ( 1904, in 1990 Coop 60562, advance to mem)
Cooperative Banks ( old form, each province, advance every type)
Taccavi loans (up to 1960s, crop failure, were at low interest rate)
10. Need of Agriculture Credit
Agrarian Economy
Agriculture Backwardness
Low income of farmers
Uneconomic Holdings
Storage & Marketing
Debt
Irrigation facility
Farm productivity
Interim difficulties
Modern Technologies
Unproductive Expenditures
Agriculture indebtedness in Pakistan
Natural climates
Civil & Criminal Suits
Unorganized Marketing Conditions
11. Problems of Agriculture Credit
Small Units
Damage to crops & Land
Low & Uncertain yields & incomes
Lack of Credit worthiness & Security
Small & large cultivators
Unproductive uses
High Cost
Limited flow of Capital to Small Farmers
Delayed disbursement of Credit
12. Measures to Solve those Problems
Agriculture Credit Institutions
(ADFC1952)(ABP1957)(ADBP1961) ( ZTBP)
Federal Bank for Co-operatives (1976)
Agriculture Credit Advisory Committee (1972)
Special Schemes (1977 extend credit amount)
Recovery of Loan
Finance in kind & supervised
Pass Book System
13. 65% total population live in rules areas
44.8% people direct involve in agriculture system
14. Current schemas in Pakistan
Asan Qarza Scheme
One Window Operation/
Zarkhaiz Scheme
Sada Bahar Scheme (SBS)
15. Maximum Limit:
Rs.0.500 million per borrower/party.
Loan Disbursement:
The borrower can draw the credit in lump sum or in piece meal according to
his need/requirement.
Rate of Mark up:
12.5 % p.a with 1% rebate for timely repayment.
16. One Window Operation/ Zarkhaiz
Scheme
Maximum Sanction Limit:
Rs.0.2 million per borrower/party
Rate of Mark-up:
12.5 % P.A with 1% rebate on timely repayment
Eligibility Criteria
Farmers having irrigated land up to 25 acres and barani
land up to 50 acres.
17. India v/s Pakistan
Pakistan
Punjab 79284 sq
Production less than Indian
Tube well 342000
Tractor 342000
Large tax on tube well
Electricity use
Depends on irrigation system
India
Punjab 19450 sq
Large production
Tube well 860000
Tractor 860000
Less tax
Solar technology
Irrigation best
system
18. Indian Bank loan to Agriculture
India
Up to RS 100,000
Above Rs 100,000
Up to 1 laces
Above to 1 Laces
Interest system
Nil
10% to 15%
Effective Rate 12.75 %
Effective Rate 13.25 %
19. 7 to 12 year’s repayment time or relaxation may be
12 months
23. Define SME’s
SME as a legally independent company with no more
than 500 employees.
24. •There are approximately 2 million Micro
Small and Medium Enterprises in Pakistan.
These include 400,000 Manufacturing units,
600,000 Service sector units and 1 million
Trade sector units (retailers).
25. Contribution to GDP
They constitute well above 90% of all enterprises in
the country in terms of
numbers. But because they are by definition small
their share in GDP is not quite as dominant. They are
estimated to be contributing approximately 11% to
GDP.
26. Contribution to Employment
The SMEs employ roughly 80% of the total non-
agricultural labour force in the country.
27. Manufacturing Sector
The following information on the SMEs in the
Manufacturing Sector would help in getting a bird’s eye
view of the situation.
Value
Employment
Number
28. PROBLEMS OF SME’s IN
PAKISTAN
% of respondents mentioning
the problem
Lack of Finance 55%
Shortage of skilled labour 39%
Getting business site 38%
Bribe 21%
Orders/Marketing of product 28%
Lack of knowledge 12%
Government interference 12%
Getting quality Raw material 10%
Getting license for work 8%
Knowledge of new Technology 8%