KARACHI - The State Bank of Pakistan (SBP) Wednesday issued guidelines to ensure availability of credit to farmers for the purchase and maintenance of water management systems and techniques. The main objectives of these guidelines are: to make efficient agri water management techniques commercially viable for stakeholders including banks; to facilitate banks in developing products for efficient agri water management techniques; to encourage and facilitate banks to provide working capital and term finance to farm and non-farm sector activities for utilisation of efficient agri water management technologies; to encourage farmers to adopt modern and efficient farming techniques and to increase the productivity of crops, fruits, vegetables etc. by adopting modern techniques. It may be pointed out that climate changes, scarcity of usable canal water availability, wastage of water and depleting underground water tables are the challenges in the growth of agriculture in the country. Adoption of modern water management techniques by the farmers is necessary to ensure optimal water utilisation for soil fertility and better yield. The guidelines, which have been developed by the State Bank in consultation with the stakeholders, are aimed at facilitating banks in developing specific products for the purpose. Banks may adopt the guidelines in the present form or with some adjustments to suit their organisational and operational needs and market characteristics, subject to compliance with SBPs regulations for agriculture financing, says AC&MFD Circular No 2 of October 12, 2011. According to the guidelines, individuals and all types of legal entities engaged in crops, horticulture, floriculture and other agriculture production activities or desirous to establish such new projects with sufficient knowledge and relevant experience are eligible for loan under the financing scheme. Under the guidelines, the financing will be provided to meet working capital and term finance requirements for purchasing of tools/ equipments and running expenses of the agri water management systems including the necessary toeing machinery for operating equipment, for example a tractor, etc. The guidelines stipulate that to meet day to day expenses for functioning and maintenance of agri. water management systems, working capital financing can be provided on revolving basis for all activities related to efficient water management. Under the guidelines, the term finance facilities can be provided for medium to long term credit needs of the agri water management system. The loan limit shall be assessed by the bank keeping in view the borrowers profile, feasibility of the business, cash flow, etc as per banks credit policies, the guidelines said, adding that the bank shall also take into consideration any government or donor funding, if availed by the borrower and will allow balance payment as a loan to the farmer, net of government/ donor subsidy or funds. Banks should undertake due diligence and market survey to assess the cost of equipment, vehicles and all other goods, the guidelines added. With regard to mark up, the guidelines said that banks shall determine mark up rate keeping in view Kibor rate and their cost of funds, etc in line with their credit policy and shall not charge any penalty on early repayment or adjustment of loans by the borrower. Banks have been advised to secure their financing, safeguard their interests and facilitate borrowers as per their lending policies. Besides, banks can secure their financing by obtaining documents as per their financing policies and SBP regulations/ circulars. Completion of documentation formalities shall be the responsibility of the bank. Under the guidelines, banks are required to develop sound and reliable loan monitoring and tracking system to ensure proper utilisation and quality of loan and its timely repayments. Bank shall ensure that financing for efficient water management is being made in compliance with SBP prudential/ other regulations for agriculture financing, including classification of non-performing loans, the guidelines added.