Finance Minister Ishaq Dar at a meeting on Tuesday approved Credit Guarantee Scheme focusing on small farmers who do not have any collateral to offer against loans. Farmers with land holding up to five acre in canal-fed and 10 acres in rain-fed areas are eligible to apply. The scheme was announced in the budget for the current financial year.
The minimum loan size is Rs 100,000 with a maximum tenor of 1 to 1.5 years. The government will share 50 per cent of the loan default risk and it has already allocated Rs 5 billion for the scheme. The scheme, an initiative of the ministry of finance, will be executed by the State Bank of Pakistan.
The meeting also reviewed the disbursement of agriculture credit in the FY 14-15. The minister was informed that against total allocation of Rs 500 billion, Rs 289 billion had been disbursed by the end of February 2015 which was 32 % higher compared to the same period last year.
The minister expressed appreciation over the growth in the non-farm sector in line with its higher share in the GDP. He also expressed satisfaction over declining trend of non-performing loans in agriculture sector from 18% in 2012 to 11.4% by December 2014.
The minister was also informed that commercial and micro-finance banks had gained momentum in terms of grant of agriculture credits which manifested upsurge in the agriculture sector. Formal launching of Credit Guarantee Scheme will be carried out in a few days.
