"The reduction in mark-up rate to 8 percent on timely repayment of loans for two consecutive instalments will enhance disbursement of agriculture loans to around Rs 40 billion during the current fiscal year," ZTBL President Istaqbal Mehdi told APP here on Monday.
He said the bank had reduced the mark-up rate from 14 percent to eight percent in accordance with President Pervez Musharraf's agriculture package to provide the maximum benefit to the farmers and to inculcate timely repayment behaviour.
"The ZTBL, in line with the agriculture package, is geared to launch implementation of the second and third phases of the package, which comprises relief on loan of Rs 0.5 million outstanding as of April 30, 2004 and in arrears since 2000 and reduction in mark-up for the bank's borrowers," he added.
Istaqbal Mehdi said, "under the relief package, in cases where the outstanding amount is up to Rs 0.5 million, settlement can be made on payment of 50 percent of the present outstanding amount with 10 percent of outstanding as down payment and balance to be paid within three months."
This settlement, however, is subject to recovery of amount equal to at least 100 percent outstanding principal, he added.
In cases where the outstanding amount is more than Rs 0.5 million but less than Rs 2.5 million, with Forced Sale Value of security more than the outstanding amount, 75 percent of the outstanding amount will be recovered in cash to settle the accounts, he added.
The ZTBL chief said, all the modalities have been worked out and detailed deliberations have just been completed with the bank's stakeholders specifically, the Asian Development Bank and State Bank of Pakistan with a view to optimising the benefits for the small farmers and rural poor.
Istaqbal Mehdi said it has been announced that no defaulter would be arrested in future and the recipients of the loans would be given due time to clear the outstanding dues.
He said: "As of now ZTBL is poised to be a catalyst in the rural and agriculture sector in Pakistan for alleviating poverty and ensuring greater outreach for cost effective and timely credit to the farmers.
TARGET ENHANCED: The target of disbursement has been enhanced to Rs 39 billion during the current year and it could become possible due to high recovery rates, he added.
The restructuring exercise, which started last year, has caused a turn-around of the institution to arrest the declining recovery, to avert any possible default and to redesign institutional architecture for facilitating provision of more agriculture credit at affordable costs, he said.
He added, resultantly, the bank's operational performance marked a significant improvement.
He said the bank has been restructured in terms of operational efficiencies, risk mitigating factors and organisational optimal mix, adding, "the bank therefore, now stands geared up to be a proactive financial institution for economic development and sustainable financial growth."
Istaqbal Mehdi said: "The bank is launching a scheme for recruitment of qualified workforce, particularly MCOs, to reinforce credit delivery and recovery mechanism."
The induction will be on merit through a competitive examination to be conducted by a renowned university. It will ensure appropriate regional restructuring, he observed.
The fresh induction, besides incurring the outreach, will also aid in changing the culture in the bank, he added.
The restructured ZTBL now is in a far better position to extend agri-credit to small farmers with technical know-how, which will basically augment the farmers' capacity not only to increase their yield but also to ensure that requisite amount of cash flow is accrued to them for repaying the loan, he said.