Agriculture Transformation Plan with Respect to Foreclosure Laws.

Following are the suggestions/ recommendations regarding amendments in prevailing foreclosure

laws.

 Banking Courts should be bound to dispose off suit within 90 days as stated in section 13 of
FIO 2001. It has become a common practice that suits continue for years which encourage
defaulters and jeopardize Bank interests
 Decrees should not be based on cost of funds rather  on actual pricing. Disposals based on
COF encourage willful default. Actual amount decree will curb this benefit which  defaulters
enjoy in case suit prolongs
 Auctioneer fee allocation is sole discretion of Banking Court Judges, which must be
structured and based on some criteria. This may be linked with decreed amount and/ or
actual execution of the decree
 Section 15 of FIO 2001 had been an effective tool for recovery of small agri default loans,
however after amendment in section, liability is to be determined by a CA Firm which will
involve high cost thus will make this remedy ineffective. Further valuation of property by
three PBA Approved valuators is also cost oriented process which must be replaced  with
admissible modes of Agri land assessment i.e three years average sales price or PIU value or
one  valuation from any approved reputable valuation firm.
 Appointment of Banking Court Judges on vacant positions. Quality of Judges and judgments
need prompt attention as most of the BC judges are not technically familiar with financial
transactions, further  Banking Courts have become just Parking place for judges as most of
the judges are appointed in BCs when they are near to retirement or are   transferred/
posted on deputation.
 Frequent and easy access to stay orders by courts hamper recovery procedures through
section 15 and ordinary recovery recourse under FIO 2001
 Revival of recovery as Arrears of Land Revenue as admissible under section 25 B of Banking
Companies Ordinance 1962 and section 4 (vii) of Loan for Agriculture, Commercial and
Industrial Purpose Act 1973 which will surely help in recovery of small agri loans.
 After pronouncement of decree in favor of Financial Institution or otherwise, instead of
executing the sales through prescribed mode as stated under section 19 of the FIO 2001, FIs
should be vested with inherited powers to dispose off the property mortgaged / under
charge registered on Agi Passbook with the lending institution to secure the facility through
summary proceedings. (Summary Proceedings are the court proceedings which are
concluded without recording evidence in detail, without being subject to cross
examination).
 Major Issues being Faced in Agriculture Development in Pakistan.

Besides problems and issues being faced in execution of foreclosure laws, following are the
general glitches in development of Agriculture in Pakistan with suggestions to overcome the
same.

 Major challenge to Farmers community is Marketing and getting appropriate prices of their
products which is usually jeopardized by intermediary players. Key to success and development
of Agri sector in Pakistan is strengthening the Marketing channels and ensuring right price to the
farmers.

 Lack of proper statistics related to sowing area, production forecast and demand /supply of
produce at Region and country level is another impediment in progress of farmers. Farmers are
used to sow those crops which gain high sale price during last season and resultantly overall
sowing of that crop increases considerably as compare to available demand of the product. Due
to this reason, prices of their produce reduces at harvest and customer suffer huge losses. This
can be overcome if proper statistics and guidelines with respect to total demand of specific
crops are published and respective crop production is managed according to country need. For
this purpose region wise cultivation of specific crops can be implemented to have desired level
of production.

 Enhanced Non Financial Advisory services to farmers regarding modern agriculture practices,
main role of Agriculture Extension wing.

 Commercial banks have limited outreach with respect to their Agri branches and Agri Field
Force, further these banks don’t cater small farmers as small tickets are not commercially viable
for them. Banks can perform better and increase agri financer inclusion by way of alliances with
Public and Corporate Sectors

 Micro Finance Banks have developed specialty in lending small agri loans, commercial banks
may finance to these MFBs, MFIs for onwards lending to farmers, this is a successful model
which BOP has efficaciously adopted.

 Subsidized Govt Financing Schemes are real solution  and headway towards financial inclusion.
PMKJ YES and PRS are successful models.

 BoP is collaborating with Public and Private sectors i.e actively engaged in Govt subsidy
schemes, joining hands with corporates like PAC for EWHR Financing and Value Index based
crop insurance schemes and has also signed financing agreements with Engro Fert,
FrieslandCampina Engro Pakistan Ltd, Nestle Pakistan, Haleed Foods, Fauji Foods Ltd etc to
provide low cost financing facilities directly to their registered farmers/ growers which will really
add to financial inclusion in agri sector.

 Small farmers have limited or no access to institutional credit mainly due to non availability of
collaterals or high cost involved in security creations. Electronic Wahrehouse Receipt Financing
 is solution to this problem where farmers can avail finance facilities by keeping stock of
commodity as security with banks. This also provides them facility to sale their crops when
prices are better in the market. BOP has signed an MOU with Naymat Collateral Management
Company Ltd which is first CMC registered with SECP to under take this business, further a pilot
project of this type of financing is also being executed in collaboration with Engro Fert for paddy
and maize crops.

 Sales Tax imposed by Govt on services being provided by Corporates in field of farm
mechanization, storages etc must be exempted and relaxed to provide these major players level
ground which will definitely add to yield increase and agriculture productivity at mass scale.

 Outreach of commercial Banks for agri lending is limited to large cities and number of Agri
dealing Branches in rural/village areas are very limited.(This can be overcome if commercial
Banks open at least of 5-10% of their Branches in village areas.

 Delay in completion of revenue documents to arrange loan from Banks. For this purpose
turnaround time of Land Record Centre/Revenue Office can be improved. Although LRMIS is
being implemented in Banks under guideline of the regulator and now farmers can obtain fard
for loans from Banks and create lien on his land but this facility can only be beneficial if
necessary amendments in Loan for Agriculture Act 1973 is made because with implementation
of LRMIS in Banks, lien can be marked in system by Bank but physical Charge on Agri pass book
to be created by concerned ADLR office which is a mandatory requirement of 1973 Act and in
this way the Agri customer is forced perform dual function rather to use single window of
ADLR(Now LRMIS is being installed in Banks for extraction of fard and marking of lien-BOP has
also enter into an agreement for its implementation)

 High NPL in Agri financing due to uncertain cash flows of farmers due to natural calamity, low
yield etc.( To encourage Banks for financing in Agri sector, Credit Guarantee Scheme for selected
agri products can be introduced by Govt.)

 Land of farmers is still in Mushtarka Khatas (joint ownerships) and is not demarcated among
joint holders due to which successful auction/sale of land is almost impossible. Further, due to
rigid cast/ families systems in village areas, sale of land is almost impossible. Buyer of land in the
vicinity are also limited and the borrower take advantage of this weak aspect and make wilful
defaults.

 There is need to review Crop Loan Insurance Policy to subsistence farmers which has not
proved to be an effective tool. Natural calamity is not being compensated timely and efficiently.
Delay in notification in declaring calamity hit areas and subsequent delay in settlement of
insurance claim

 For calculation of production loan limit, Naqal Khasra Girdawari is mandatory requirement
which is not a reliable document and fake Khasra Girdawi can be arranged easily. Further,
original owner does not allow to incorporate name of lessee in Kasra Girdawai and in this way
an absentee farmer can get and misuse financing facility.  Alternate options i.e. farm field visit
report of RM Agri can also be allowed in place of Kahsra Girdawari.