KARACHI, Oct 23: The crop loan insurance scheme has hit snags and agricultural borrowers of National Bank of Pakistan are not being provided policy cover for rabi crop as announced earlier, for which the bank is reported to have signed a memorandum of understanding with the National Insurance Company.

Informed sources said that the finance ministry had taken exception to NBP’s decision of picking up premium cost of insurance from those borrowers who own farms of economic size.

Under the scheme, premium of subsistence land-holding farmers was to be picked up, and farmers of economic size units were not included.

At a meeting early this week, the finance ministry is reported to have sought details of the implementation arrangements being made for operation of crop loan insurance and enquired whether any mechanism has set in place to monitor the scheme.

The NBP has not prepared any monitoring system and is said to have asked for 15 days time to put such a system in place.

In addition, the NBP on its own decided to benefit the big farm owners by offering them premium cost free on insurance cover.

None of the relevant NBP official was available to offer any explanation and information on implementation of crop loan insurance scheme.

It was scheduled to be launched with the start of loaning for rabi crop.

“We hope to start receiving information on crop loan insurance from NBP after Oct 30,’’ NICL chairman Abid Javed told Dawn on Wednesday.

He conceded delay in the launching of the scheme, but said that the NBP had signed an MoU with the NICL and is committed to go ahead with providing insurance cover.

Under the scheme, the NBP will offer insurance cover to borrowers for rabi crop and inform the NICL with relevant details. The premium for crop insurance is 1.5 per cent.

The NBP will inform the NICL about subsistence farm owner and also about economic size farmer.

At the end of rabi loaning, sometimes in December, the NICL will inform the finance ministry of the premium cost of subsistence farmers and will get a reimbursement from the finance ministry through the NBP.

But for premium of economic size holding, the NBP would pay to the NICL.

The NICL is charging 1.5 per cent premium for every crop. The government offered insurance coverage to five big crops—three main kharif crop—cotton, sugarcane and rice—and two rabi crops—wheat and maize.

But the NICL and NBP have signed MoU to provide insurance cover to more than five crops, including fruit orchards.

The NBP is set to offer Rs37 billion loans to farmers in the current fiscal year. Of this, a part is for rabi croppers who cultivate wheat and maize.

Under the scheme, all these borrowers should have been covered by the crop insurance but as reports suggest quite many have been skipped because of NBP.

“We are signing another MoU with the Bank of Khyber in the next few days to provide crop insurance protection to farmers in the NWFP. Tobacco is the main cash crop of the NWFP.