KARACHI, Oct 9: The State Bank has introduced a new revolving credit scheme for the farming and rural community that make bank credit available to farmers/growers and other borrowers for three years.

The SBP announced on Thursday that revolving credit would be available for the borrowers with one-time documentation and that it would be renewed automatically every year on partial repayment.

The revolving credit would be disbursed by domestic commercial banks — Zarai Taraqiati Bank and Punjab Provincial Cooperative Bank.

The SBP said the scheme would be a purely cash facility and allow flexibility in the use of limit as per choice or priority of the borrowers. It further said that mark-up would charged only on the amount withdrawn or the limit availed of by the borrowers.

Credit limits would be fixed on the basis of existing land holding, other rural/urban properties or collaterals and against personal securities. The limits would be flexible on the basis of increased land holding/securities during the period as per provisions of the Supervised Agricultural Credit Scheme. The borrowers would be able to make full adjustment or repay full principal plus accrued mark-up anytime during the year as per their choice or convenience.

The central bank said the definition and procedure of the revolving credit scheme shall remain the same for all banks.

It said it would make public the details of the scheme through booklets published in English/Urdu and regional languages. Copies of such booklets would circulated widely through media as well as through bank branches; federal and provincial ministries of agriculture and various bodies of growers and businessmen.

The central bank has designed revolving credit scheme for farmers in consultation with domestic banks, ZTBL and Punjab Provincial Co-operative Bank.

Senior bankers say the purpose of this scheme is to make bank credit available to farmers on a larger scale to achieve better growth rates in agriculture and to help banks employ surplus liquidity profitably. Banks are currently awash with surplus funds and increased agricultural lending is not only possible it is the need of the hour. Bankers involved in agricultural credit disbursement say there is a lot of scope for enhancing bank credit to the farming community.

The government has already identified agriculture as one of the three key areas where there is a demand for higher bank credit. The other two areas are: small and medium enterprises and consumer financing.