agricultural banking of pakistan

7/29/2019 Agricultural Banking of Pakistan

1/28

Agr icul tural Banking of Pakistan

Acknowledgement

All praise and gratitude due to ALLAH ALMIGHTY who created man in His own image and

enjoyed upon him to travel on the earth and enter into a profound and analytical study of

Universe for spiritual appreciation of ALLAHS unity and His attribute as well as for

harnessing the material manifestation of the world to the mankinds profitable utilization. In

the first place, therefore we express our utmost thanks to ALLAH. At the next stage I offer

our gratitude to our Apostle and prospector Prophet Muhammad (P.B.U.H) for his golden

saying Gain knowledge is in China.

We would like to express my gratitude and appreciation to all those who gave me the

possibility to complete this report. A special thanks to our Course instructor Mr Ahmad

Imran whose help, stimulating suggestions and encouragement, helped me to coordinate my

project especially in writing this report.

We take this opportunity to express my profound gratitude and deep regards to my guide Mr

Ahmad Imran for his exemplary guidance, monitoring and constant encouragement

throughout the course of this thesis. The blessing, help and guidance given by him time to

time shall carry me a long way in the journey of life on which I am about to embark.We also take this opportunity to express a deep sense of gratitude to Syed Amjad Ali Gillani,

Manager, ZTBL, for his cordial support, valuable information and guidance, which helped

me in completing this task through various stages.

A special thanks goes to my team mate, Mr Muhammad AwaisIqbal, Mr Kamran

Saqib,WajeehaShafqat , who help me to assemble the different aspects of the report.

I am obliged to staff members of ZTBL, for the valuable information provided by them in

their respective fields. I am grateful for their cooperation during the period of my assignment.


2/28

DECLARATION

We hereby declare that the project work entitled

Agricultural Development Banks of Pakistan

Submitted to the Institute of Management Sciences , is a record of anoriginal work done by

us under the guidance of Mr Ahmad Imran, Course Instructor Money & Banking , and this

project work is submitted in the partial fulfilment of the requirements for the completion of

the course Money and Banking.


3/28

Executive Summary

Banks play an important and active role in the economic development of country. If the

banking system in a country is effective, efficient and disciplined, it brings about a rapid

growth in the various sectors of the economy such as agriculture, industrial, and the SMEsectors. If the banking system is unorganized and inefficient, it creates maladjustments and

impediments in the process of development. In Pakistan, the banking system is very well

organized. The SBP established on July 1st, 1948 stands at the apex and is responsible for the

operation of the banking system in Pakistan. The other banks such as commercial, specialized

or unspecialized banks which form the banking structure in the Pakistan are playing an active

role in the

ZTBL has provided many products and services for their customers. The product and

services of the ZTBL can raise the living standard of rural areas and develop the agriculture

sectors of a country as well. The Pakistan is an agriculture country and the products and

services of the ZTBL plays very important role in increasing the GDP and accelerates

economic growth. For this purpose, the ZTBL provides many facilities for their customers,

such as provides schemes and loans, obviously help the customers to invest money in their

businesses, to get maximum profit from it and to pay low interest rates.

Banking is one of the most sensitive businesses all over the world. Banks play very important

role in the economy of every country all over the world and Pakistan is no exemption. This

report is about one of the leading Agriculture Bank of the Pakistan known as

ZaraiTaraqiatiBank Limited. ZTBL is playing its one of the most important role in thedevelopment of the Agriculture Sector of the Pakistan. On 14thDecember 2002, under the

ordinance of the Agricultural Development of the Pakistan 1961, ZTBL was incorporated as

Public Limited Company. This Bank severs its venerated customers in the form of different

customized products. It is providing both type of severs financial and non-financials mostly

to its clients of the rural areas of the Pakistan, which comp rises of 68% of the Pakistans total

population. The bank has country-wide network in the form of 349 branches and is severing

round about half of the million clients annually and over accumulated account holders with

the average loan size of around Rs.89, 000 serving 65%, 31% & 4% of subsistence, economic

and large growers respectively.


4/28

Agricultural Banking

The agricultural banks (specialized banks) are set up to provide financial assistance to the

agriculturists. The agriculture banks provide short-term credit to the farmers for the purchase

of seeds, fertilizers, pesticides, fuel.etc. They also make medium term advances for buyingtractors and introducing modern techniques in farming.

The role of agriculture in Pakistan economy is of pivotal nature. Due to diverse geographical

and climatic conditions, the country has tremendous potential for agricultural growth and

development Agriculture and Rural Business Division (ARBD) has gained further strength

with improved and efficient delivery and control mechanism for meeting increased demand

for credit by the farmers in easy, accessible and affordable manner. With an innovative

product range, being best rated in the market, many banks are continues to surpass its

allocated targets for agriculture financing.

While focusing on business development, this unit also achieved further refinement in

back office processing including credit initiation, operations, risk management, in line with

the business dynamics and regulatory framework. ARBD has extended to 89 branches across

the country and remains proactively engaged with its stakeholders for aggregation of services

and improving life standard of farmers through its distribution network.

Pakistan is basically an agricultural country, and finance has been needed for its rapid

development. With a view to meet this basic need the Agricultural Development Finance

Corporation was set-up in 1951, and was entrusted with the task of providing financial

facilities for the development and modernization of agriculture, including:

Forestry Fishery Animal Husbandry Poultry Dairy Farming

Later on the Agricultural Development Bank of Pakistan was also established in

September 1957, under the Agricultural Development Bank Act. The Bank is to provide

credit in cash or in kind, warehousing and storage facilities to agriculturists, cooperative

societies and other bodies, of which the majority of members are agriculturists. As the

functions of the Agricultural Development Finance Corporation and Agricultural

Development Bank were similar and since both were working with capital provided by the

Government, they were merged into one organization known as Agricultural Development

Bank of Pakistan on February 18. 1961. The Agricultural Development Bank of Pakistan is a

banking company for the purpose of the Banking Companies Ordinance and the State Bank

of Pakistan Act.


5/28

INTRODUCTION

History of the Bank

Pakistan is one of the agricultural country, about 75% of its population is directly or

indirectly associated with agriculture. Due to its widespread and extensive canal system, its

land is very fertile. The Agricultural Development Finance Corporation was steeped in 1951,

keeping in view the need of finance to rapid development of agriculture sectored. It also

provides financial facilities for the development and modernization of agriculture, including

forestry, fisher, animal husbandry, poultry and dairy farming. Under the Agricultural

Development Bank Act, the Agriculture Development Bank of Pakistan came in being in

September 1957. Under this Bank, the agriculturists, co-operation societies and others were

provided the facilities of credit in cash, warehousing and storage. Agricultural Development

Finance Corporation and the Agricultural Development Bank were similar in function and

government provides capital to both of them. Later On February 18, 1961, due to their similarfunctions these both came under the single banner of Agricultural Development Bank of

Pakistan. Agricultural Development Bank of Pakistan (ADBP) Under the ADB Ordinance

1961, the Agricultural Development Bank of Pakistan (ADBP) was established originally.

Then, ADBP was reorganized into a public limited company, with the purpose of ensuring

better governance and the provision of high quality financial services to its rural clientele.

Then all assets, business, contracts and liabilities of ADBP were taken by theZaraiTaraqiati

Bank Limited (ZTBL and on December 14, 2002 and started its countrywide operations as a

public limited banking company. The ADBP had than become the single largest institution in

the country catering to be viable credit need of the agriculturists and in disbursing over PRs.

5000 million per annum for the development and modernization of agriculture.

Evolution and Conversion of ADBP into ZTBL

Agriculture Development Bank of Pakistan (ADBP) was converted into ZaraiTaraqiati Bank

Ltd (ZTBL) by the Federal Government and it started its operations with profound effect. It

was restructured accompanied with new board of directors and was titled as public limited

company. Its aim under the presidential ordinance was to ensure good governance, autonomy,delivering high quality, viable and timely financial services to a greater number of clientele in

the agricultural and rural segment of the country with adequate return to the stake holder. In

1984Zarai Taraqiati Bank (ZTBL) under the companys ordinance was registered with SECP

as a public limited and by virtue of finance order, all assets, liabilities proceeding undertaking

of theADBP stands transferred to and vested in ZaraiTaraqiati Bank with effect from

December 14, 2002.The conversion of ADBP into ZTBL had a conditionality of the Asian

Development Bank (ADB) loan framework as per which a restructuring exercise was

initiated. The restructuring process entailed ADBs Rural Finance Sector Development

Program (RFSDP) with the objective to transform ZTBL into a sustainable Rural Finance

Institution. It also included the up-gradation of Information technology (IT) infrastructure for


6/28

which funds from ADBs loan were to be utilized. As part of the overall organizational

revamping strategy, the bank has taken several initiatives to enhance its lending activities

while adopting a prudent approach with regards to credit quality. Kisaan Support Services

(Pvt.) Limited (KSSL), a subsidiary of ZTBL, has been engaged to sell fertilizer to farmers at

subsidized rates, while a Memorandum of Understanding (MoU) is signed between KSSLand Pak Arab Fertilizer to ensure timely availability of agricultural inputs. The main aim

behind the restructuring of ADBP and its conversion into ZTBLis extend swore credit to the

needy segment of highly productive and yielding Agri and non-farm activities. It was done

keeping in the mind that this step shall greatly add to the credit distribution mechanism.

National Operation The ZaraiTaraqiati Bank Limited runs its operation in whole Pakistan and

also outside Pakistan and the persons conducting such business. The banks total manpower

is 7665 having 4515officers and 3150 staff. It has 49 regional offices and 342 branches

throughout the Pakistan including the Federally Administered Tribal Area (FATA), Federally

Administered Northern Area (FANA) and Azad Jammu and Kashmir. ZTBL while

completing its period of 42 yearsoperational activities tried to serve the forming community

through the country for their medium and long-term development credit needs

organizationfirst the head office of the ZTBL was located in Karachi and was shifted to

Islamabad later during 1973. Presently there are 9 division and 33 departments in the head

office. It has 49regional offices and 343 branch offices apart from 8 audit directorates in the

field, two staff colleges at Islamabad and Karachi. To cater for loan requirement of the

forming community at their door steps over 1408 Mobile Credit Officers have been deployed

in the field, each covering25 villages in an average.

ROLE OF ZTBL IN THE ECONOMI C DEVELOPMENTOFTHE PAKISTAN

Banks play an important and active role in the economic development of country. If the

banking system in a country is effective, efficient and disciplined, it brings about a rapid

growth in the various sectors of the economy such as agriculture, industrial, and the SME

sectors. If the banking system is unorganized and inefficient, it creates maladjustments and

impediments in the process of development. In Pakistan, the banking system is very well

organized. The SBP established on July 1st, 1948 stands at the apex and is responsible for the

operation of the banking system in Pakistan. The other banks such as commercial, specializedor unspecialized banks which form the banking structure in the Pakistan are playing an active

role in the economic development of the country. The role of the ZTBL in order to achieve

economic growth and development of the Pakistan is briefly explained as under:

1. Development of Agr icul ture & I ndustri al Sector.

The ZTBL particularly in rural areas of Pakistan are now providing credit for the

development of agriculture & industrial sector. The provision of credit to agriculture

&industrial sector has greatly helped in raising agricultural productivity and income of the

farmers. This has led to increased demand for industrial goods and expansion of trade


7/28

&industry. The use of bank drafts, cheque, bills of exchange, credit cards.etc., has

revolutionized both national and international trade.

2. Banks Promote Capital Formation.

The ZTBL plays an important role in rising of the financial resources. They encouragesavings by giving various types of incentives to the savers. They expand branches of the

banks in the rural and urban areas and mobilize savings even at far of places. These savings

are then made available to the businesses which make use of for productive purposes in the

country.

3. Investment in new Enterpri ses.

Businessmen normally hesitate to invest their money in risky enterprises. The ZTBL

generally provide short, medium& long term loans to farmers to invest in new enterprises and

adopt new methods of production. The provision of timely credit increases the productivecapacity of the country. The organized banking system helps in directing physical resources

into productive channels. It also keeps a balance between the availability and requirements of

the capital in the country.

4. Balanced Development of dif ferent regions.

The ZTBL plays an important role in achieving balanced development in different regions of

the country. They help in transferring surplus capital from developed regions to the less

developing regions. The trade industries etc. of less developed regions are ableto get adequate

capital for meeting their business needs. This in turn, increases investment, trade andproduction in the country.

5. Monetization of the Economy.

The commercial banks by opening branches in the rural and backward areas are reducing the

exchange of goods through barter. The use of money has now greatly increased the volume of

production of goods. The non-monetized sector (barter economy) is now being converted into

monetized sector with the help of commercial banks.

6. Implementation of M onetary Policy.

The central bank of the country controls and regulates volume of credit through the active

cooperation of the banking system in the country. It helps in bringing price stability and

promotes economic growth within shortest possible period of time. The ZTBLunder the

supervision and guidance of the SBP help in implementing and achieving the objectives of

the monetary policy which vary from time to time.

7. Fi nancing Development Projects.

The ZTBL provide short, medium & long-term loans for financing of development projects

both in private and public sectors. The ZTBL starts projects with the Ministry of Food,Agriculture &Livestock (MINFAL) launched an integrated development program entitled


8/28

Crop Maximization Project in 15 districts. The MINFAL will provide funds to the tune of

Rs.299.833 million to the ZTBL and thus help in accelerating the rate of economic

development in the country.

8. Booting the Exports:

In order to boosts the exports of the agriculture and industrial goods of the Pakistan, the

banks have established export promotion cell for the information and guidance of the

exporters.

9. Less Reli ance on Foreign Capi tal:

A planed banking system by launching vigorous campaign of mobilizing idle saving in the

country can meet the capital development requirements from within the country. The country

will thus have to rely less on foreign capital for financing in the development projects.

I nvestment Policy of Agricul tural Banks

The organization of the Department is spread over the following Divisions:

1 Agricultural Credit Estimation & Target Monitoring Division

2 Agriculture & Rural Finance Policy Division

3 PSCAC Secretariat/ Coordination & Services Division

Brief functions of each Division are as under:

I . Agri cultural Credit Estimation & Target Monitoring Division

Agricultural credit estimation/ assessment in consultation with stakeholders.

Allocation of indicative agricultural credit targets to banks.

Periodical monitoring of agricultural credit targets.

Undertaking all functions relating to ACAC.Follow-up for implementation of ACAC decisions.

Monitoring Credit lines to PPCBL &ZaraiTaraqiati Bank Ltd.

Managing the claims of bonafide losses of five big commercial banks.

Collection of periodical agri. finance data from banks and its dissemination.

Responding to Senate/ National / Provincial Assembly questions.

Preparation of reviews/ write-ups on agri. credit for various publications.


9/28

I I . Agriculture & Rur al Fi nance Poli cy Division

Reviewing agri/ rural finance in terms of issues/ challenges faced,

developments taking place in agriculture/ rural finance both in the country andelsewhere, developing an adequate knowledge and information base for policy

formulation, etc.

Introducing new products, schemes, guidelines in agri/ rural finance in

consultation with banks and stakeholders to catalyse growth and activity in the

sector.

Providing guidance to banks in understanding agri/ rural finance policies/

issues/ PRs of SBP, etc.

Formulation of agriculture & rural finance policies in consultation with

stakeholders.

Coordination with Federal and Provincial Government departments on

agriculture finance policies and issues.

Reviewing/ amending existing agri/ rural finance policies, instructions and

Prudential Regulations, etc. based on new developments and feedback from

stakeholders.

Organizing periodical meetings with agri. heads to discuss their performance

and issues being faced in agriculture finance.

Acting as an executing agency for SBP component of Agribusiness Finance

Development Project of ADB.

Managing developmental projects of the department in collaboration withother divisions/ units/ departments.

I I I . PSCAC Secretariat/ Coordination & Services Division

Coordination with stakeholders and formulation of working groups/

committees for making recommendations to increase the flow of credit to

various sectors of the economy.

Preparing working papers for the PSCAC meetings.Conducting the meetings.

Preparation of minutes and follow-up action plans.

Implementation of follow-up actions in collaboration with all concerned.

Administration, logistics, dispatch and support services for smooth running of

the Department.

Preparation of Business Plan & Budget for the Department.

Initiating and undertaking information dissemination and awareness building

programs for farmers and special training programs for commercial banks.


10/28

ZTBLVision StatementEmerge as a Leader in provision of agriculture credit by promoting and sustaining

productivity through a market/agribusiness focus. To bridge yield gaps of all agriculture

commodities and tonsure that the welfare of farming population is radically improved and the

environment is protected from harmful human interventions.

M ission Statement

To become a leader in guiding entrepreneurs & farmers implement an agribusiness andmarketing led approach that brings strong commercial orientation in production catering

domestic and international markets. As a specialized agriculture development bank, deliver

pragmatic technology and optimal solutions to farm communities and rural areas across all

agro-ecological zones with sensitivity to economic growth and equity. Develop close

partnership and linkages with all its clients to dramatically transform, restructure and revamp

the agriculture scene and enhance its outreach by investing wisely and judiciously in new

approaches, ideas and means of mass communication.

Corporate Objectives

The prime objective of ZTBL incorporated under the companies ordinance 1984 is to

provide rural and agriculture sector and mitigates poverty. The credit facilities in rural areas

shall be provided in cash or kind at a market based a mark-up rate that ensures operational

and financial sustainability of the bank. The ZTBL is to Develop and operate as a financially

and operationally sustainable R.F.I of the country. To assist rural community, particularly the

small farmers, in raising their productivity and income levels through timely delivery of

credit, advisory and ancillary services. BuildZTBL's image as a proactive, client friendly,

financially & operationally sustainable with indigenous product deployment. Establish and

provide backward and forward linkages to strengthen agri. value added commodity chains.

Engage in public - private and wholesale - retail partnership to deepen outreach and reduce

operating cost. It functions as a rural commercial bank to mobilize rural capital formationand

to commercialize the agri. sector by delivering the true value of credit to the client. Provide

aide range of risk insurance products to its clients. Open up its venues of operation to

Domestic& International Banking Industry to avail comparative advantages.

Nature of Business

ZaraiTarqiati Bank is to provide credit facilities to the farmers, including hiring and renting

of anything which it may advance way of loan and the provision for ware hosing facilities ofsuch terms and subject to such conditions as may be prescribed by its rule to agriculturists for


11/28

the purpose of agriculture and to persons engaged in cottage industries in rural areas and

provide sustainable rural financing services, particularly to small farmers.

Management H ierarchy

The general direction and superintendence of the affairs of the bank are entrusted to a 12

members Board of Directors consisting of chairman appointed by the Federal Government,

the Federal Government officers from the Ministries of Finance and Food and Agriculture,

four officers of the four Provincial Governments and onion official nominated by each

province. One member on this board represents the State Bank of Pakistan also. However, at

present the bank has 7 directors including chairman. The bank also has a president appointed

by the federal government and a company secretary. In ZTBL, the president supervises and

directs the Chief Executive Officer who supervises and directs the Head of Department, who

then supervise and direct the officers under them. The management hierarchy of bank is as

follows; Earlier the bank was functioning like a pure government institution and permission

has to be sought on every step for moving forward. Now the bank management board will be

fully empowered to run the affairs of the ZTBL.More than 2,000 employees of the bank have

opted for Voluntary Golden Hand Shake Scheme, offered by the bank to its employees. Bank

has established a task force for improving the operational performance of the staff and it was

monitoring the disbursement, recovery operations and performance of field functionaries. The

taskforce comprised 10-15 officers and each officer will head a desk exclusively to monitor

3-4 regions. This task force will be responsible to evaluate performance of each MCO,

Manager and Regional Manager on the achievement of banks policies regarding credit andrecovery periodically.

Board of Di rectors:Syed Qamar-Uz-Zaman Shah

Chairman Board

Mr. Muhammad Zaka Ashraf

President/ CEO

Mr.Yawar Zia

Director

Mr.QamarZamanChaudhry

Director

Mr.MuhammadIftikhar Khan Mohmand

Director


12/28

Mr.Tauqir Ahmad Faiq

Director

Dr. Khalid Ahmad Khokhar

Director

Mr. Imam Bux Sheikh

Director

Mr.Muazam Ali

Company Secretary

PRODUCTS & SERVICES OF ZTBL

The ZTBL has provided many products and services for their customers. The product and

services of the ZTBL can raise the living standard of rural areas and develop the agriculture

sectors of a country as well. The Pakistan is an agriculture country and the products and

services of the ZTBL plays very important role in increasing the GDP and accelerates

economic growth. For this purpose, the ZTBL provides many facilities for their customers,

such as provides schemes and loans, obviously help the customers to invest money in their

businesses, to get maximum profit from it and to pay low interest rates.

Products offered to Meet F inance Need of Farmers

ZaraiTaraqiati Bank Limited (ZTBL) is a specialized bank providing agricultural credit in

rural areas of the country. Pakistan is an agricultural country and near about 60% of its

population is working directly or indirectly related to agriculture industry. But instead of

being an agricultural country Pakistan is still not gaining benefits from this sector which it

can gain. Some time we even does not able to fulfil your food requirement and sometime we

have bumper crop but does not have facilities to store them properly, in this way we are

wasting our resources. To gain benefit from agriculture sector it is required tube modernized

to increase the per acre production and also to build warehouses to store. The main hindrance

in the modernization of agriculture is the unavailability of finance. The other financial

institutions feel reluctant in giving finance to farmers due to high level of risk in the

production of this field. To facilitate farmers and to help in modernization of agriculture

sector the government has established this bank which is contributing its part in achieving

government objective from many decades. ZTBL is offering a blend of products tofu fill the

need of different types of customers


13/28

SCHEMES OF ZTBL

The ZTBL provides various schemes for customers, in order to strengthen the rural and

agricultural sector of economy, mitigate poverty and accelerate growth. The Schemes of the

ZTBL is which is briefly explains as under;

Sairab Pakistan Scheme:

The ZTBL can raise the irrigated area for the purpose to accelerate rate economic growth and

to facilitate the farmers. The ZTBLhas assigned the collaboration agreement with the KSB

Pumps Company Limited under the Sairab Pakistani Scheme. The ZTBL will provide loans

to the farmers for installation of tube wells and turbines whereas KSB Pumps Company

Limited will provide quality pumps, turbines, equipments to borrowers for efficient pumping

of waters. The water can plays vital role to improve per acre yield. Out of total 31million

hectors area of the Pakistan, 22 million hectors is cultivated while 9 millionhectors is not

cultivated & waste mainly due to non-availability of water. More over increase in watersupply being a key input is required to raise cropping intensity and hence the income of the

farmer. Since inception the ZTBL financed over 143000 tube wells amounting to Rs.15

billion. The KSB Pumps Company will provide quality machinery and equipment for

efficient pumping of water. The company shall also provide after sale service including

replacement of parts and availability of spares through its network of dealers despite

technological advancements and rapid growth of industrial sector, agriculture is still the back

bone of the Pakistan's economy. It contributes 22% towards the GDP and employs nearly

45% of country's labour force. It provides raw material for preparation of industrial products.

So it has both pulled & pushes effect on the economy.

Supervised Agr icultur e Credit Scheme:

Under this scheme agriculture loans are given for short, medium and long term loans up to

Rs.1 million per borrower. The loans are sanctioned for fats, livestock, orchard, tractor,

agricultural machinery, tube well and irrigation facilities. Under the scheme besides provision

of credit, information is to the farmers for planning the farm, production, guidance for

implementation of the scheme, marketing and repayment of loans.

White Revoluti on Scheme:

In order to modernize the dairy farming for increasing milk supply, mitigate poverty in

Pakistan, and improving the living standards of the rural areas in Pakistan for the purpose to

achieve growth and development in agriculture sector of Pakistan, the ZTBL may start the

Strategic Partnership Agreement with the Pakistan Development DiaryCompany (PDDC)

and the Nestle Pakistan Limited (NPL) under the white revolution scheme. Under this

participatory approach, the diary sector would be modernized with a view to increase milk

supply, mitigate poverty and improve the living standard of the rural population. The ZTBL

has earmarked funds to the tune of Rs.5000 million for financing of 50,000 animals

(buffaloes and imported cows) during the five years period 2007 to 2011. ThePDDC will also


14/28

help the ZTBL in the selection of clients and processing of loan cases. Initially the schemes

will be for modernization of 5000 farmers during 5 years period involving Rs.700 million.

Under the scheme 1000 farms would be covered on yearly basis. The modernization of dairy

farm will be carried out through financing milk cooling tank, generator, voltage stabilizer, hot

water geezer, water pump, cooling pad and other dairy equipment. There would be maximumlimit of loan of Rs.1 million per borrower party. ThePDDC would bear the entire amount of

mark-up charged in the loan cases & provided the 50% of principal part of loan is repaid in

time by the borrower. The remaining 50% amount of principal along with the amount of

mark-up would be paid by the PDDC.The Nestle Pakistan Limited would help to select and

identify good clients for the ZTBL to improve quality breed of foreign and local dairy

animals. The NPL can provide technical guidance to the farmers through nestle veterinary

doctors. The NPLwould purchase milk through its network and make weekly payments of

milk sale to the ZTBL for the adjustment of loan.

Micro Credit Scheme:

This Scheme has been launched since 15th July, 2000for the uplift of rural poor. The landless

poor such as; tillers, harries and small landowners having land not exceeding 2 acres may

avail loan under Micro Credit Scheme. It is operational in all branches of the ZTBL through

all the Mobile Credit Officers. Both, men and women may obtain loans under the scheme as

an individual or as a member of group of 5-10 members. The minimum credit limit is Rs.

5,000while maximum credit limit is Rs.25, 000. One hundred and thirty six income

generating activities or cottage industry items have been identified for lending under the

scheme. The loan may be advanced against one surety with 50% solvency of the assessed

value of property owned by the guarantor or security of tangible property. Being small loansinvolving high cost 18% per annum mark-up is charged, whereas2% rebate is given on timely

repayment. All loans under these Schemes are recoverable within 18 months after

disbursement of loan.

Zarkhaiz Scheme (One Window Operation):

For timely and conveniently provision of credit to purchase inputs, loans is provided to the

borrowers under this scheme being conducted twice a week during Rabi &Kharif seasons. All

the related departments such as revenue, agriculture, post office.etc. attend the focal points

which are established at convenient places. The farmers get their pass books prepared andloan applications processed on the same day whereas sanction payments are made within

three days at branch. For Rabi crops, one window operation from October to January and for

Kharif crops from April to September each year which is extendable as per requirement of

particular area.

SadaBahar Scheme:

For providing timely input loans for crops and working capital for poultry and fishery etc.,

the ZTBL has launched a SadaBahar Scheme. This scheme is also known as Revolving

Finance Scheme. The assessment for inputs requirements for the whole year is made at thetime of first application. The amount so assessed is treated as revolving limit provided it is


15/28

within the security limit. The managers are authorized to sanction such loan limits up to Rs.5

Lake. The salient features of the scheme are given as under:

1. Revolving Credit Limit is fixed to cater production credit and ancillary requirements of the

farmers during one year period.

2. The borrowers can draw the credit in lump sum or in instalments according this

requirement.

3. The borrowers can repay in lump sum or in instalments during the year when his cash

position allows him.

4. The Pass Book containing transactions in his account is supplied to every borrower free of

cost.

Tea Financing Scheme:

In order to increase the tea cultivation in Mansehra,Swat, Mutta and Dir in Malakand

Division, the tea financing scheme has been introduced which would not only save the hard

earned foreign exchange.

Kissan SupportServices Ltd.

Subsidiary of ZTBL

Kissan Support Services Ltd. Is a subsidiary of ZTBL which is established with a capital

investment of 100 Million to help ZTBL in the achievement of its objective and also to make

availability of trained human capital to the bank?

KSS Aim

To provide support staff to ZTBL &under takes its non-core activities.

KSS Operation

Kissan support services operate under its Memorandum & Articles of Association.

Objectives

The main objective of KSS is following:

To provide to the Bank all kinds of support staff and ancillary services

To plan, organize and establish training facilities to impart training to the banks staff

Drip Irrigation System to assist the bank clients in marketing of their product and

provide storage facilities

To assist the bank clients in marketing of their product and provide storage facilities


16/28

To provide welfare services to the employees of the Bank including education,vocational training, sports and recreation facilities

To invest any surplus money of the company not immediately required

To carry on any business, which may seem to the company capable of being

conveniently carried onTo liaison & establish contracts with agricultural research organizations for

development of efficient, effective and appropriate technologies

To carry on business of providing consultancy, advisory and other agency

services and support services to ZaraiTaraqiati Bank Limited

To provide to the Banks clients quality products and services for efficient

and improved farming.

Services/Activities so far undertaken by KSS

Security Services to ZTBL

Recruitment/provision of staff

Janitorial Services provided to:a.ZTBL Head office buildingsZTBL

Farms.Staff College.Printing stationery office .AV Unit.Old record office.

Sports club.Warehouse

Management of Sports Activities

Management of Sports Activities

Photocopy Services

Day to day minor repair and maintenance of ZTBL HQ Buildings

Types of loans

Banks provides loans through various products/schemes for short, medium and long term

depending on the cash flow of the borrowers. The bank gives special focus and importance to

fulfil the genuine and real needs of the small farmers in terms of production loans (seed,

fertilizers, pesticides, POL, labour charges etc.) as well as for working capital purpose. These

loans are provided to the needy farmers in cash and kind under various schemes like

SadaBahar, AwamiZarai, General Credit and One Window Operations Zarakhazi Schemes.

The bank also provides Development loans to farming community like tractors, allied agri-

equipment /implements, besides loans for poultry and livestock, fisheries, orchards,

plantation, and irrigation schemes etc.

Types of Loans Advanced

1. Short Term Loans

Short term loans are loans for shorter period of less than a year. It includes, crop production

working capital loans recoverable in lump sum commencing after the harvest/marketing of

respective crops and within maximum period of 12 months.

2. Medium Term Loans


17/28

Medium term loans are for a period of more than a year but less than 5 years. In includes,

dairy farming and livestock etc. The instalments of these loans are usually paid able in

quarterly or half yearly basis.

3. Long Term Loans

Long term loans are for a period of more than 5 years. These are development loans which

require large amount and also need some time to show its result in the shape of better

production. It includes loans for tractor, agricultural machinery, poultry farming,god owns

and orchard in yearly/half yearly instalments within maximum period of 8years.

Maximum Credit limit

Maximum limit of loan is Rs.1.00 million per borrower/party.

Lending Criteri a

The bank advances preferably to small farmers and following criteria is observed in overall

distribution. Subsistence farmers 70%Economic farmers 20%Big farmers 10%Production

loans 77.5%Development loans 22.5%The management adopts lending recovering linkage

criteria to ensure smooth operations of the bank and honour its obligations.

Security

The bank provides loans under Agri-Pass Book System as well as other collateral acceptable

to the bank. Simplification of loan documents is in order to facilitate the farmers; the Bank

has simplified the loan documentation to be applicable for three years of the loan period. The

main loan documents which are presently being used in the branches of the bank are as under

loan application form IB-7 Revised loan Agreement-cum-Guarantee Charge Creation

Certificate/Sanction Mutation entered in bank favour sanction latter for loan.

Major L ending scheme

SadaBaharScheme One Window Operation/ZarkhaizScheme Crop Maximization Project-IWhite Resolution Scheme Red Meat Financing Package Scheme Green Revolution

SchemeSairab Pakistan Scheme Crop loan Insurance SchemeBanazir Tractor

SchemeAwamiZaraiScheme Establishment of Model Village

Performance and Progress of Projects Loan Disbursement

During the year 2009 loans amounting to Rs.77.680 billion were disbursed to 567.415

borrowers as compared to Rs.70.698 billion availed by 571,946 borrowers during the year

2008. Thus growth in amount was 10%.

RECOVERY PROCEDURE OF LOAN


18/28

The recovery procedure of the ZTBL loan is to carried and taken by three steps such as

recovery schedule, issuance of notice and legal action which is briefly explains under;

Recovery Schedule:

The recovery schedule in each loan case as per terms of sanction of loan is fixed and

communicated to the borrowers after disbursement of loan. In case of default or failure in

repayment of any instalment due date the mark-up shall continue to be charged and

lastinstalment due to this may differ from the amount of instalments fixed at the time of

disbursement.

I ssuance of Notice:

The ZTBL can issue notice for recovery of loan which is known as Demand Notice. It is

issued before the due date of every instalment. A legal notice is issued one month after the

due date informing the borrower that if the amount is not repaid within next one month,

further legal action will be taken to recover the dues.

Legal Action:

The legal action can be initiated against the defaulter if loan is not repaid even after expiry of

legal notice period. Where the court in bank's favour has decreed case, account is to be settled

by recovery of amount from the auction of the mortgaged property. The bank may purchase

the mortgaged property if considered feasible to dispose it off later on through auction or in

any manner deemed fit for getting the best price. The bank may dispose of the mortgaged

properties of defaulters for satisfaction of its dues without intervention of courts under

Financial Institutions Ordinance 2001

Types of Secur ity

Immovable Property

Agricultural Land

Under Pass Book System 80%

Outside Pass Book System 70%

Under Alienability Certificate 66%

Commercial/Industrial Land under Pass Book 80%

Outside Passbook System

Urban Residential/Commercial Plots in all localities outside Passbook 75%Alienability Certificate 66%


19/28

Residential/Commercial Buildings 70%Lease hold rights of a leased land of CDA/KDA with 99 years lease70%

Moveable Property and Guarantees

1.Unconditional Bank guarantee from scheduled Banks

Up to maximum amount of an un-conditional Bank guaranteeafter keeping sufficient margin

for un-paid mark-up, cost, chargesand expenses.

2.Guarantee issued by Central or Provincial Government

Full amount of loan plus return and other charges.

3.Government securities

85% of face value or market value whichever is less.

4.Defense Savings & FEB Certificates

75% of value of certificates presented as security.

5.Fix Term Deposits Receipts

85% of face value of deposits receipts.

6. NIT Units

80% of the face value or market values whichever is less.

7.Life Insurance policies

85% of surrender value

8.Pledge of Potatoes/Seed Potatoes price or market value whichever is less

Up to 75% of Govt. support.

Personal Surety

Against a bond with two sureties under General Credit and one surety in Special Schemes up

to Rs.25,000/- or Up to 50% of appraised value of properties of sureties.

Repayment Periods

Short Term L oans

Crop production working capital loans recoverable in lump sum commencing after the

harvest/marketing of respective crops and within maximum period of 12 months.

Medium Term Loans Dair y


20/28

Farmingand livestock etc.In yearly/half yearly/monthly instalments and within maximum

period of 5 years.

Long Term L oans

Tractor, agricultural machinery, poultry farming, gowns and orchard in yearly/halfyearlyinstalments within maximum period of 8 years and. above

VARIOUS ANALYSES

INTRODUCTION

The analysis is a tool, which is used for checking the overall performance of any

organization. It is not only used on national level but also on international level for the

purpose to check internal and external factors that influence the organization, positively or

negatively and leads the organization towards failure to success.

There are various analyses, such as the SWOT analysis, human resource analysis and

marketing analysis, which is briefly explain as under;

SWOT ANALYSIS

The word SWOT is abbreviated to strengths, weakness, opportunities and threats while

analysis is a tool, which is used for checking the overall performance of any organization.

The SWOT analysis is a strategic planning tool used to evaluate the overall organizations

strengths, weakness, opportunities & threats and involves specifying the objective of the

organization and identifying the internal and external factors that are favourable and

unfavourable to achieve that objective. The SWOT analysis is designed to help an

organization from failure to success. Finally, we do the strength & opportunities because it is

helpful while we avoid the weaknesses and threats which is harmful for organization, which

is shown in below figure

Strengths:

The attributes of the organization which are helpful in achieving the objective.In other words,

strengths means, the activities that an organization does well favourable chances or positive

factors in the internal environment due to which organization achieve the objective. Thestrengths of the ZTBL are given as under;


21/28

1. Strong Supervision and Management:

The supervision and management of the ZTBL is very strong such as step by step, effective

and efficient that leads the bank toward failure to success

2. Provide many Facilities for Employees:

For maintaining the employees, the ZTBL provides the facility of health, safety and

employee relations &training.

3. Employees Traits:

All staff members are well mannered in attitude, communications & following the ethics.

4. Credit Rating:

The report of Jun 22, 200, the credit rating of the ZTBL was reaffirmed the medium to long-term entity rating of AAA (Triple A) with a stable outlook and short term rating of A-1+

(A-One Plus) assigned to the ZTBL.

5. Risk Management:

The risk management of the ZTBL is still in the process of restructuring and efforts have

been put in place to adequately equip the risk management function with credit review, credit

risk rating and value at risk models. Pakistan is an agriculture country with major portion of

its economy dependent on agricultural sector. ZTBL recognizes this responsibility and thus

also caters to agriculture sector which promises high returns.

6. Expansion of ZTBL:

The ZTBL is expanding day by day because customer accepts it. Its network expanded to 342

branches and 25 zonally offices in the Pakistan, which will attract large number of customers.

Weakness:

The attributes of the organization which are harmful in achieving the objective. In otherwords, weakness means, the activities that an organization lakes or unfavourable chances or

negative factors in the internal environment due to which organization do not achieve the

objective. The weakness of the ZTBL is given as under

1. Understaffing:

The total number of employees is 5,326 in the ZTBL Head Office. In age of technology and

globalization, the understaffing may cause unnecessary work burden on employees

decreasing their efficiency.

2. Lack of Refreshment Courses:


22/28

Although the ZTBL has its own Training and Development Canter but it needs to give

refreshment courses to its employees more frequently so that they came explore new

dimensions and conquer worlds.

3. Seniority Based Promotion:

Promotion in the ZTBL is purely on seniority basis rather than on performance. This really

de-motivates the employees because they know that it doesnt matter whether they perform

well or bad.

4. Lack of Job Rotation:

Most of the employees work in a particular department and they specialize only in one

department. In case of absence of one employee, any other employee cannot perform this

work. In this way bank not only loses the business but also results in dissatisfaction of the

customer.

5. Shortage of skilful Labour:

The shortage of skilful labour or manpower that will lead the organization from success to

failure. Because in the ZTBL, there are many contract and temporary based employees that

has lake of managerial& financial skills.

6. Lack of Qualification:

The employees working on the same position may have different degrees like B.Sc., B.A.

etc. which devaluate the students of MBA, BBA, and other well qualified staff. So there is alack of professional staff in different departments and lack of theoretical knowledge of the

employees as well.

7. The Rate of Absenteeism and Turnover:

The absenteeism &turnover rate is too high thats results the conflicts in the organization.

Opportunities:

The attributes of the organization which are helpful in achieving the objective. In other

words, opportunities means, the activities that an organization does well or favourable

chances or positive factors in the external environment due to which organization achieve the

objective.

The opportunities of the ZTBL are given as under;

1. Proper Utilization of Recourses:

The Organization is made up three types of recourses, such as human, physical & financial

resources which come from external environment. However, in the age of globalization for


23/28

achieving growth, the competent, skilful and the English speaking employees are of the

requirement of the organization.

2. Increasing Extensive Advertisements:

The ZTBL can increase the extensive advertisements of new products, services, vacancies, inorder to increase customers & heir competent employees from external environment.

3. Mobile Credit:

The ZTBL can start mobile credit which is the best way to effectively utilize its present

resources to gain a competitive edge.

4. Increasing the Amount of Loans and Capital:

The ZTBL increases the amount of loan for their customers, which is five lacks, in order to

attract the large number of customers. The ZTBL issue a large amount of capital toagriculture sector, in order to, utilize its resources more efficiently and to earn more profit.

5. Creating Public Relations:

The ZTBL also, involves in creating public relations that will increase the image and

profitability of the bank. Often, public relations are conducted through the media that is,

newspapers, television, magazines, and internet.etc. thats attract a large number of

customers.

Threats:

The attributes of the organization which are harmful in achieving the objective. In other

words, threats means, the activities that an organization lacks or negative factors in the

external environment due to which organization do not achieve the objective. The threats of

the ZTBL is given as under

1. Avoid Discrimination:

The ZTBL can avoid discrimination because it is harmful for the bank in achieving its

objective. The bank can hire the employees from external environment. The right person is

for right for job will leads the organization towards failure to success.

2. Avoid Illegal Activities:

The employees of the ZTBL can avoid the illegal activities in external environment that will

reduce the reputation and image of the ZTBL.


24/28

3. Internet Banking:

It is the main problem that was found to be a lack of trust in the new banking channel by

customer. However, effective complaint management can increase customers loyalty and

trust in Internet Banking. However, the CrisesManagement Plan has been developed which

is under review by the senior management. The objective of this plan is to have clear

guidelines and communication in the event of any crises occurrence, which may threaten the

safety of its staff, the security of its assets, the continuity of its operation and the reputation of

the ZTBL

Human Resource Analysis

The organization is made up by three types of resources such as human, physical and

financial resources. Recently, the ZTBL can properly utilize their resources more efficiently

in order to strengthen the rural and agricultural sector, mitigate poverty and investment

activities. But the most important is the human resource and which the key ingredient for

successes of any organization. Hiring and retaining productive people is critical to the success

of every organization which is permanent, temporary or contract basis. The Human Resource

Division mainly involve in hiring of employees, training and development of employees,

employees motivation.etc. Activities necessary for staffing the organization and

sustaining high employee performance The achievements of the ZTBL and the

implementation plans for future can never be possible without skilled and motivated

employee, for this purpose the HRD makes continuous effort to attract highly educated,

skilled and trained manpower in different fields especially in the field of IT, HR and Finance.

Trainings, workshop, seminars, support for higher education are the few activities beingcarried out to upgrade the skills of professionals working. The ZTBL can motivate their

employees by providing compensation packages, house rent, medical allowanceetc. The

Human resource analysis is briefly explained as under;

1. Hiring of Employees:

The ZTBL can hire the employees by submitting the CV in the Human Resource Department.

If the person is eligible for the post, then the Head of HRD will call to inform the person for

the interview. Recruitment staff including job description, preparation, preparing

advertisement, checking application forms, short listing, interviewing and selectingcandidates through the selection procedure is done by HRD.

2. Training & Development of Employees:

Once the employees are recruited by the Human Resource Department, it is very important to

develop their skills. There are two ways to develop their skills and to give trainings in the

ZTBL Staff collage such as theoretical and practical training. However, initial training or pre-

service training is given to the employees at initial stages of fresh candidates. This training

covers the theory related topics such as banking rules, regulations and operations. After

completing the theoretical training, they are placed on different branches for getting practicaltraining.


25/28

3. Employees Motivation:

The ZTBL can motivate their employees by providing different facilities. The employees,

who are motivated, exert a greater effort to perform the assigned tasks effectively and

efficiently than those who are not motivated. Various measures are used in the ZTBL for

motivating the employees. The techniques are as follows;

I. Compensation Package:

The compensation is based on the employees knowledge, education, skills and experience.

There is no fixed pay scale in the bank. Many people get different salaries even though they

had been selected for the same batch under the same circumstances with same qualification

but mostly depend on the grade on which the employees is ranked.

II. Promotions:

The ZTBL can promote the employees to higher grades on the basis of performance during

each year.

III. House Rent:

The house rent is provided to all categories of staff. This allowance is not payable to those

who are provided with accommodation by the ZTBL. The ZTBL can also provide the

accommodation facility for their employees, in order to reduce the absenteeism.

IV. Medical Allowance:

The ZTBL will reimburse the cost of medical advice and medicines, claimed by the

employees for themselves and their dependents on production of medical certificates from

employees indicating disbursement made by him.

The Marketing Analysis

The marketing is a process of managing the performance of business activities designed to

plan product, price and promote; in order to achieve organizational objectives. Though it

sounds simple, the actual practice poses many challenges. The marketing analysis of any

organization plays a vital role in directing its future direction. A good marketing analysis cangive new heights, whereas a poorly designed analysis can prove to be disastrous. However,

the marketing is based on the customers satisfaction through its value added products and

services. The ZTBL regularly use different methods of marketing in order to aware and

attract customers regarding their products and services. The marketing analysis is done by

using various methods used by the ZTBL, which is briefly explained as under

1. Prin t Media Advertisement:

The ZTBL give different advertisement regarding their products and services, in order to

attract large number of customers from time to time in the newspapers.

2. The 4Ps:


26/28

The 4Ps means the product, price, place and promotion . The ZTBL can use 4Ps regularly in

order to attract large numbers of customers, by proving lot of products and services.

I. Product:

The ZTBL strategy is offer most comprehensive portfolios of personalized financial solutionsthat are customer tailored to serve the requirements of customer

II. Price:

The ZTBL follows the strategy of low margins, high volume with its low mark up and easy

repayment schedule it tends to be more attractive even for consumers with less money.

III. Promotion:

The ZTBL effectively advertises its services and product using the through broachers, book

let magazines and low margin on loan is also the base of promotion.

IV. Placement:

With a wide network of ZTBL the bank operates through 25zonal offices with 342 branches

under them with over 1250 agriculture graduates known as MCO.

3. Internet and Electronic Media Advertisement:

The ZTBL consistently give information regarding their products and services on the internet

and also give commercials on the television for awareness and attracting the large number

customers.

4. Brochures:

They have designed different brochures for each department and for each product; these are

given to customers for information and attraction purposes.

5. Sports Sponsorship:

The ZTBL can sponsor different sports promotion activities on television and radio likeCricket, Hockey.etc.

F INDINGS & RECOMENDTIONS

FINDINGS

I. The employees working on the same position may have different degrees like B.Sc.,

B.A. etc. which devaluate the students of MBA, BBA, and other well qualified staff. So

there is a lack of professional staff in different departments.

II. There is no job rotation for employees which create job burning.


27/28

III. The officers of RRD face many problems during preparing different financial reports

which consume lot of time.

IV. The employees are not satisfied with the compensation package; they are just getting

experience and want to shift to another organization that has strong position in the agriculture

finance market.

V. The availability of staff training makes employees aware of work and is know done by the

ZTB Staff College which is provided by the KSSL

VI.The absenteeism & turnover rate of the employees is too high thats results the

misunderstanding and conflicts in the bank.

VII. In the ZTBL, there is problem is understaffing of employees. The total number of

employees is 5,326 in the ZTBL Head Office. In age of technology and globalization, the

understaffing may cause unnecessary work burden on employees decreasing their efficiency.

RECOMMENDTIONS

I. Although sill, there is cooperative environment in the ZTBL, but there is a need to further

boost it up. There must be cooperation among staff members, management, customer and

shareholders.

II. The job rotation of duties of employees should be implemented to improve the

performance which will enhance their skills and confidence.

III. The motivation level of the employees should be enhanced by increasing compensation

and giving extra fringe benefits.

IV. The advertisements of the products and the services of the ZTBL should be done in a

proper way with a strategic management.

V. To hire creative, skilful and young employees on the basis of their eligibility and

experience but not on discrimination basis. The recruitments should be strictly on merit basis

and induction should be after proper and extensive training.

VI. To remove the file keeping barriers, which waist a lot of time on searching of files. There

should be a proper check and balance. The documentary records of the ZTBL should be

correct and complete.

VII. More rewards and bonus schemes should be for management as well as for employees

and promotion should be based on performance of employees and not on favouritism.

VIII. ZTBL has developed a web site but still only its front home page has been developed

while other banks have good attractive sites.


28/28

IX. The efforts should be made to reduce the employee turnover and absenteeism rate

because it creates misunderstanding and conflicts in the ZTBL.

X. In order to increase cooperation among employees, management has to arrange different

parties or get together which will create love, care and cooperation among employees.

XI. MIS is still not fully understood by all of the employees. To cope with this situation, the

management should arrange workshops and short courses, so that the employees can benefit

fully from the MIS.

XII.The employees attitude andbehaviour towards work and customers must be positive

and polite way at time of conversation.

XIII. In order to increase the motivation, job satisfaction, and organizational commitment the

organization should give special incentives to all the old as well as new employees. This may

be in the form of promotion or increase in pay or other facilities provided to them onperformance basis.

XIV. The promotions should be given to the employees of ZTBL on the basis of performance

rather than seniority, time period or designation.

XV. The job rotation techniques should be adopted so as to make the staff knowledgeable of

the operation of various departments of the ZTBL.

agricultural banking of pakistan

Documents