Transcript
Farm Service Centers, Agdepots and Veterinary Field Units Credit Systems
Development
Agenda Goals and Objectives Financial products offered by Financial
Institutions Financial Institutions criteria and requirements Credit Scheme 1: Direct Lending Credit Scheme 2: Reference through Supplier Credit Scheme 3: Supplier on-lends to agriculture
networks Steps to obtain finance
Goals and objectives
• Develop different credit programs to enhance access to finance for existing agricultural networks (Agdepots, Farm Services Centers, Veterinary Field Units)
• Design and implement Sharia-compliant wholesale and on-lending loan products
• Develop procedure to simplify the process of applying for loan
3
Agriculture Sector Stakeholders
Financial Intermediaries
Non-financial Intermediaries
Potential borrowers
Commercial Banks, Finance Companies
Suppliers Processing Facilities, distribution agencies
Leasing Companies, Farm Service Centers
Farm Stores, Ag Depots, VFUs
Microfinance Institutions
Associations, Cooperatives
Agents, Farmers
4
Access to FinanceFAIDA’s role to facilitate access to finance for the following
agriculture stakeholders including but not limited to: Large Suppliers, Wholesalers, farmers Ag Depots, Farm Service Centers, Veterinary Field UnitsFAIDA will work closely with the following financial
institutions • Specialized Agriculture Funds/Finance Companies• Commercial Banks• Microfinance Institutions
5
Potential Financial Institutions (Fis) Agriculture Development Fund Ghazanfar Bank Pashtani Bank Azizi Bank Afghanistan Rural Finance Company First Microfinance Bank Afghanistan United Bank Microfinance Institutions (Oxus, FINCA)
6
Lending products Islamic lending products
• Murabaha• Musharakah• Mudarabah• Ijara
Conventional loans• Agriculture loans• Individual Loans for various purposes• Group Loans for micro-credits
7
Sharia Compliant Lending products • No cash – buy & sell transaction• Asset backed products• Profit and risk sharing
8
Murabaha
Murabaha is a particular kind of sale where the transaction is done on a “cost plus profit”, basis i.e. the seller discloses the cost to the buyer and adds a certain profit to it to arrive at the final selling price.
9
Musharakah
Musharakah means a joint enterprise formed for conducting some business in which all partners share the profit according to a specific ratio while the loss is shared according to the contribution ratio
10
MudarabahThis is a kind of partnership where one partner gives money to another for investing in a commercial enterprise. The investment comes from the first partner who is called “Rab-ul-Mal” (Investor). The management and work is an exclusive responsibility of the other, who is called “Mudarib” (Working Partner). Profit is shared as per agreed ratio. In case of Mudarbah all losses are borne by Rab-ul- Mal.
11
IjarahIjarah related to the usufructs of assets and properties, and not the services of human beings. ‘Ijarah’ in this sense means ‘to transfer the usufruct of a particular property to another person in exchange for a rent claimed from him.’ In this case, the term ‘Ijarah’ is analogous to the English term ‘leasing’. Here the lessor is called ‘Mu’jir’, the lessee is called ‘musta’jir’ and the rent payable to the lesser is called ‘ujrah’.
12
Conventional lending productsDisbursement of actual cashClear interest rate calculation Credit – Debtor relationshipFixed loan duration
13
Pros and cons of loansPros
Alternative access to finance, not depend on credit sale
Fee on credit sale is higher to compare with loan charges
More options to buy agro inputs from various suppliers
Legal contract with FI14
ConsRepayment schedule
not always support agriculture activities
Procedures takes time (loan process and approval)
Financial Institutions’ criteria Legal business activity/operation Registered with AISA/MAIL or other agency Financially sustainable for the last 2 years Good history purchase of agro inputs Location of business in relatively secure place for
loan monitoring & follow up
15
Financial institution’s requirements Detailed explanation of use of loan Existing market opportunities Legally registered collateral Borrower should contribute to the finance
transaction from his own resources Repayment period should be 1 year
16
Lending documents required Concept Note Balance Sheet (2 years) Income Statement (2 years) Cash Flow Projection (optional) Copy of license given by AISA or other
governmental agency Copy of collateral papers: Qabala, or legal title Copy of National ID (Tazkera) Other documents upon request
17
Required Collateral and/or guarantees
Personal property: land, buildings Equipment (optional) Third party guarantee (optional) Purchase Order (optional) Signed contract with MAIL or other agency
(optional) A loan to security ratio could be 1:1.5
(100%/150% security to the loan)
18
Additional Information Make sure that business place could be
monitored and visited any time Make sure to provide original documents for
collateral Make sure information provided match the real
situation, provide with real picture Get recommendations from local community
leaders if necessary
19
Credit Scheme 1
20
Financial Institutions
Ag Depots, Farm Service Centers, Veterinary Field Units
FAIDA will facilitate preparation of Concept Note and financial statements
FAIDA will provide with basic info and due diligence, provide clients with FI’s requirements
FAIDA
Credit Scheme 1 - Description
Financial Institutions disburse the loans directly to the AG, FSC and VFU
FAIDA will facilitate preparation of Concept Note and financial statements
FAIDA will provide with basic info and due diligence to FIs, and provide clients with FI’s requirements
FAIDA will play a vital role in lending process
21
Credit Scheme 2
22
Loan
for a
gro i
nput
s Documents for loan
Agro inputs, no cash
FI transfers the loan funds to
Supplier
FS, AG, VFU submit
documents to FI for approval
Credit Scheme 2 - Description Supplier provides agro inputs to Farm Stores, Ag
Depots, VFUs Supplier provides information & recommendations to FI
for funding of potential borrower Borrower submits all required documents to FI FI conducts a due diligence and approves a loan Borrower and FI sign a loan contract Supplier releases agro inputs to Borrower, no cash
disbursement to borrower Borrower repays a loan directly to FI
23
Credit Scheme 3 Financial Institutions
Supplier
Ag Depots, Farm Service Centers
Vet Field Units
Loan
Loan
Repayment
Repayment
FAIDA
Supplier on-lends to AG, FS, VFU Technical
support in extending the loans
Credit Scheme 3 - Description Financial Institutions disburse the loans directly
to Suppliers Supplier on-lends to Farm Service Centers, Ag
Depots, VFUs Supplier has a full responsibility for loan
repayment Sales based on traditional credit system FAIDA provides technical assistance to Suppliers
and farm service centers, agdepots and VFUs.
25
Steps to obtain finance Meet with FAIDA representative / Regional
Coordinator Reason for borrowing Type of business Location of business Number of employees Financial Statement Collateral Other information upon request
26
Procedure Regional Coordinator will assist borrower in filling
out Concept Note and Financial Projection Submit documents to FAIDA Kabul Office FAIDA will discuss it at the Pre Banking Review
Committee If approved, it will be submitted to relevant FI for
further processing
27
FAIDA office locationLocation Name E-mail Phone Number
Mazar Naqibullah Azizpur
nazizpur@faida.af 0794501303
Jalalabad Faridoon Awalkhil
fawalkhil@faida.af 0793507024
Kandahar Waleed Sahibzada
wsahibzada@faida.af 0793499395
Herat Zahir Shirzai msherzai@faida.af 0793587721
Kabul Farida Akbar afarida@faida.af 0794501157
Kabul Mahdi Parsa mparsa@faida.af 079746918028
THANK YOU!!!
29
top related