KARACHI, March 10: The State Bank of Pakistan on Monday issued ‘guidelines for poultry financing’ to facilitate and encourage banks to enhance flow of credit to poultry sector.

The poultry farmers can get both short and long-term loans under the fresh guidelines which have asked banks to develop products for this sector.

“These guidelines, which have been developed in consultation with stakeholders, are aimed at facilitating banks in developing internal expertise and products for providing needed working capital and term finance to the poultry sector,” said a release issued by the SBP.

Under these guidelines, individuals and all types of legal entities engaged in poultry-related activities or desirous of establishing new broiler, breeder, hatcheries or layer farms having sufficient knowledge and relevant experience will be eligible to draw loans under poultry financing.

The SBP has asked banks to use these guidelines for developing their own products, according to their credit policy and operational and market requirements, subject to compliance with its (SBP) regulations for agriculture financing. Besides, banks may also coordinate with the concerned government departments, including Small and Medium Enterprises Development Authority (Smeda) for obtaining necessary information/feasibility report about the poultry sector, which will be useful for developing specific products for financing to this sector.

Under these guidelines, financing will be provided to meet working capital and term finance requirements of poultry sector.

Working capital financing on revolving basis can be provided for all activities, including purchase of feed, birds/day-old chicks, feed raw material, vaccination, vitamin and other medication for poultry birds, saw dust, wood, coal, medicines, water filter cartages, over-head expenses i.e. labour, utility bills, cost of fuel for generators and vehicles, transportation, utensils for poultry bird feed, etc.

The term finance facilities can be provided for medium-to-long term credit needs of the poultry sector which may include construction of broiler, layer, breeder and hatchery farms and feed mills, control sheds automatic drinkers /tube feeders, generators, ventilators, table/breeder eggs storage refrigeration plants, purchase of machinery/equipment for poultry farm/hatchery/feed mill, transport vans -- eggs and poultry carrying van, distribution vehicles, such as motorcycles, pick-ups, etc., deep freezers, slaughtering & de- feathering machine etc.

Under the guidelines, the loan limit shall be assessed by bank keeping in view the borrowers profile, feasibility of the business, cash flow, etc., as per bank’s credit policies. Banks should undertake due diligence and market survey to assess prices of equipment, vehicles and all other goods for poultry sector.

Banks shall determine mark-up rate keeping in view Kibor rate and their cost of funds, etc., in line with their credit policy. However, banks shall not charge any penalty on early repayment or adjustment of loans by the borrowers.