1. INTRODUCTION Zarai Taraqiati Bank Limited (ZTBL) erstwhile Agricultural Development Bank of Pakistan (ADBP) is the premier financial institution geared towards the development of agriculture sector through provision of financial services and technical know how. The restructuring of former ADBP is being carried out with the aim to uplift the agriculture and rural sector by raising farm productivity, streamlining the institutional credit and increasing income generating capacity of the farming community. ZTBL was incorporated as a Public Limited Company on 14th December, 2002 through repeal of ADB Ordinance of 1961 and registered under Companies Ordinance, 1984 with an independent Board of Directors (See Fig.-1). ZTBL is the largest and specialized bank facilitating the agriculture sector in the country. It has 342 branches all over the country. The ZTBL has multi services and investment plans for development of agriculture in country. The Head Office of the ZTBL is in Islamabad with a total network of 342 branches (including 26 Zonal Offices) which exists in all four provinces of the country with the following break up: 1
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1. INTRODUCTION
Zarai Taraqiati Bank Limited (ZTBL) erstwhile Agricultural Development Bank
of Pakistan (ADBP) is the premier financial institution geared towards the development
of agriculture sector through provision of financial services and technical know how. The
restructuring of former ADBP is being carried out with the aim to uplift the agriculture
and rural sector by raising farm productivity, streamlining the institutional credit and
increasing income generating capacity of the farming community. ZTBL was
incorporated as a Public Limited Company on 14th December, 2002 through repeal of
ADB Ordinance of 1961 and registered under Companies Ordinance, 1984 with an
independent Board of Directors (See Fig.-1).
ZTBL is the largest and specialized bank facilitating the agriculture sector in the
country. It has 342 branches all over the country. The ZTBL has multi services and
investment plans for development of agriculture in country.
The Head Office of the ZTBL is in Islamabad with a total network of 342
branches (including 26 Zonal Offices) which exists in all four provinces of the country
with the following break up:
1. Punjab Province 1592. Sindh Province 893. Balochistan Province 324. N.W.F.P. Province 62
--------------Total 342
========
1.1 Capital Structure of Zarai Taraqiati Bank Limited
ZTBL is a key Rural Financial Institution (R.F.I) of Pakistan providing
affordable, rural and agriculture financial/non-financial services to the rural
Pakistan (comprising 68% of the total population of Pakistan). The ZTBL through
a country-wide network of 342 branches is serving around half a million clients
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annually and over one million accumulated account holders with the average loan
size of around Rs.89,000/- serving 65%, 31% & 4% of subsistence, economic and
large growers respectively.
The total assets of the ZTBL stand at Rs.84 billion with a nation-wide working
strength comprising 5500 employees. The share of ZTBL in total national
institutional agricultural credit remains around 35%.
Authorized capital of ZTBL is Rs.25/- billion, comprising 2,500 million ordinary
shares of Rs.10/- each. As on December 31, 2005 the paid up capital was
Rs.11.870 billion, almost all of which is owned by the Federal Government,
leaving token ownership to all the Provincial Governments.
In its report of June 22, 2005 JCR-VIS has re-affirmed 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 ZTBL. It has also re-affirmed the rating
assigned to it on a stand-alone basis i.e. the medium to long term rating of "BB+"
(Double B Plus) with a "Stable" outlook and the short term rating at "A-3" (A-
Three).
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(Fig – 1)
BOARD OF DIRECTORS OF ZTBL
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ZTBL alone serves around 0.5 million farmers annually and reportedly shares over 50%
of the institutional credit. The ZTBL provides loans, for a wide range of investment
activities encompassing tractors, implements, irrigation, horticulture, livestock, and
fisheries and for production category (seed, fertilizers, pesticides). The ZTBL is trying to
recover its stuck up loans so that these can be recycled to the agriculture sector.
2. COMPANY BACKGROUND
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
· Fisheries
· Animal Husbandry
· Poultry
· Dairy Farming.
Later on the Agricultural Bank of Pakistan was also established in September 1957, under
the Agricultural Bank Act. The ZTBL 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 Bank of Pakistan 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.
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Zarai Taraqiati Bank Limited erstwhile Agricultural Development Bank of Pakistan
(ADBP) is the premier financial institution geared towards the development of
agriculture sector through provision of financial services and technical know how. The
restructuring of former ADBP is being carried out with the aim:
To uplift the agriculture and rural sector by raising farm productivity.
Streamlining the institutional credit.
Increasing income generating capacity of the farming community.
ZTBL was incorporated as a Public Limited Company on 14th December, 2002 through
repeal of. ADB Ordinance of 1961.
The new corporate structure redefines the ZTBL's status as a Public Limited Company
registered under Companies Ordinance'1984 with an independent Board of Directors
which aims at ensuring good Governance, Autonomy, Delivering high quality.
2.1 Current Scenario:
The ZTBL restructuring plan covers the following;
Governance: establish an environment that facilitates good governance and accountability.
Systems: modernize operations through use of technology, networking, and communication tools.
Business processes: streamline products and delivery systems so as to reduce transaction costs, simplify operations, and increase outreach.
Products and services: introduce products and services that are financially economically viable.
Human resource development: improve standards and skills of management and staff and strengthen training capacity.
IT: establish new hardware and software platform to support MIS, accounting system including forensic accounting, and risk management functions.
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3. CURRENT MARKET SHARE AND THE COMPITITORS
The all commercial banks fall in the list of competitors. These commercial banks
extend loan to the Agriculture Sectors for uplifting of the agriculture market, but the
ZTBL enjoy the major share of the market. The overall market share of the ZTBL in the
Agriculture loaning and RFIs is 37% whereas the cumulative percentage of other
commercial banks is around 45. The rest of the 18% is being covered by the cooperative
societies and other domestic banks. The following pie chart shows the percentage-wise
position of the shares of different quarters.
Market Share in Agriculture Development Sector
ZTBL 37%Commercial Banks 45%Other Domestic Banks and Cooperative Societies 18%
4. MISSION/VISION STATEMENTS AND CORPORATED OBJECTIVES
As part of the Business Plan, the Board of Directors also reconsidered the Mission
and Vision Statements of the ZTBL. The Board therefore finally approved the amended
Mission and Vision statements on 16th February 2008.
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4.1 Mission Statement
To play effective role in the promotion of economic growth, by enhancing the
availability of credit to the agriculture sector, through reliable access to
sustainable financing, special lending programs, technical assistance, and other
products & services, and to promote career development opportunities for
increasing professionalism and technical proficiencies of employees.
4.2 Vision Statement
Dedicated to serve the needs of the farming community, by delivering financial
products and technical services on a competitive and sustainable basis, in a
convenient , efficient and professional manner, leading to success of the ZTBL
and the farmers.
4.3 Corporate Objectives
Develop and operate as a financially and operationally sustainable R.F.I of the country.
Assist rural community, particularly the small farmers, in raising their productivity and income levels through timely delivery of credit, advisory and ancillary services.
Build ZTBL'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.
To function as a rural commercial bank to mobilize rural capital formation and to commercialize the agri. sector by delivering the true value of credit to the client. Provide a wide range of risk insurance products to its clients.
Open up it venues of operation to Domestic & International Banking Industry to avail comparative advantages.
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5. PRODUCTS AND SERVICES
5.1 Products/Schemes
ZTBL with the aim to uplift the agriculture and rural sector by raising farm
productivity introduced multiple schemes with very much success. Some of the
schemes are :
5.1.1 Supervised Credit Scheme
Under this scheme agriculture loans are given for short, medium and long
term loans upto Rs. 1.00 million per borrower/per case. The loans are
sanctioned for In Fats, livestock, orchard, tractor, agricultural machinery,
tube well and irrigation facilities etc. under the scheme besides provision
of credit, information are to the farmers for planning the farm, production,
guidance for implementation of the scheme, marketing and repayment of
loans.
5.1.2 Zarkhaiz (one window operation)
For timely and conveniently provision of credit to purchase inputs, loans
are provided to the borrowers under One Window Operation being
conducted twice a week during Rabi and Kharif seasons. 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.
5.1.3 White Revolution Scheme
In order to modernize the dairy farming for increasing milk supply and
mitigate poverty in the country and improving the living standards of the
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rural inhabitants, a strategic partnership between ZTBL and MIs. Pakistan
Dairy Development Company has been agreed upon and an agreement in
this regard has been signed on 6th June, 2007. The salient features of this
strategic partnership is given here as under:
i. The company shall recommend good dairy farmer to ZTBL and send the loan request to the ZTBL along with necessary documents.
ii. The concerned branch of the ZTBL will process the case as per prescribed procedure of the ZTBL.
iii. The modernization of dairy farm will be carried out through financing milk cooling tank, generator, voltage stabilizer, hot water gezer, water pump, cooling pad and other dairy equipment. The loan will be considered against securities acceptable to the ZTBL excluding surety, hypothecation of animal and assets created out of ZTBL’s loan.
iv. There would be maximum limit of loan of Rs. 1 million per borrower/party:
• Initially the scheme will be for modernization of 5,000 farm during 5 years period which involved Rs.700 million, 1000 farm would be covered under the scheme on yearly basis. The project shall be started on pilot basis in potential area namely Lahore, Hyderabad, Quetta and Peshawar zones and its expansion would be made gradually.
• PDDC 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 PDDC.
5.1.4 Sairab Pakistan Scheme
Despite technological advancements and rapid growth of industrial sector,
agriculture is still the back bone of Pakistan’s economy. It contributes
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towards GDP and employs nearly 45% of country’s labor force. It
provides raw material for industrial products. So it has both pull & push
effect economy. Water plays vital role to improve per acre yield. Out of
total million hectors area of Pakistan, 22 million hectors is cultivated
while million hectors is cultivable waste mainly due to non-availability of
water. More over increase in water supply being a key input is required to
raise cropping intensity and hence the income of the farmer. Since
inception ZTBL financed over 143000 Tube wells amounting to Rs. 15
billion. For raising irrigated area to accelerate the economic growth and to
facilitate. Farmers ZTBL has signed collaboration agreement with M/s
KSB Pumps Company Limited (Company) on 28 May, 2007.
ZTBL will disburse Rs.6 billion to the farmers for installation of 30,000
Tubewells/Turbines during the next five years. KSB Pumps Company will
provide quality machinery/equipment for efficient pumping of water. The
company shall also provide after sale service including replacement of
parts/availability of spares etc. through its network of dealers. The
company agreed to allow warranty period of one year.
5.1.5 Sada Bahar Scheme
For providing timely input loans for crops and working capital for poultry
and fishery etc, the ZTBL has launched a Sada Bahar Scheme. Assessment
for inputs requirements for the whole year is made at the time of first
application. The amount so assessed is treated as Revolving Limit
provided it is within the security limit. The Managers are authorized to
sanction such loan limits upto Rs.O.500 million. Scheme’s main features
are as under:
Revolving Credit Limit is fixed to cater production credit and
ancillary requirements of the farmers during one year period. The
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documentation once completed remains applicable for three years
with yearly cleanup/renewal without any further documents. The
borrowers can draw the credit in lump sum or in installments
according to his requirement. Like-wise he can repay in lump sum or
in installments during the year when his cash position allows him.
Pass Book containing transactions in his SBS Account is supplied to
every borrower free of cost.
5.1.6 Tea Financing Scheme
In order to increase the tea cultivation in District Mansehra, Swat, Mutta,
Shangla par and Dir in Malakand Division, tea financing scheme has been
introduced which would not only save the hard earned foreign exchange
but would also help improve the socioeconomic condition of the
inhabitants of the area. The salient futures of the scheme are given as
under:
Maximum Credit Ceiling of Rs.60, 000/- per acre has been fixed. Farmers
owing land upto five acres are eligible to avail loans. Credit will be given
in 3 installments: first year Rs.30, 000/-, 2nd year Rs.15,000/- 3rd year
Rs.15,000/- provided the disbursed loan is used properly. The credit would
be repayable within 1 year with 6 years grace period with prescribed
markup of 9% per annum. Rebate of 1 % will be allowed in mark-up on
timely repayment and proper utilization of the loan.
5.1.7 Crop Maximization Project
Ministry of Food, Agriculture and Livestock (MINF AL), Government of
Pakistan has launched Crop Maximization Project in 109 villages in
various districts through out the country to increase the productivity/yield
of crops. Under the project MINFAL has to provide funds of Rs, 299.893
million to ZTBL for disbursing loans to the project farmers for purchase of
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inputs. Till the time funds of Rs.468 Million have since been received by
the ZTBL for the purpose. These funds are to be revolved for meeting
input credit needs in the project villages till 30th June, 2014 after which
the ZTBL will return the principal amount to MINFAL. Accordingly
Credit needs of the project farmers are being met by respective ZTBL
branches through Village Organizations formed for the purpose. Duly the
currency of the project the ZTBL is authorized to charge 4% per annum
mark-up on loans to project growers to meet its operational cost, however
in case of default Bank’s normal rate of return i.e. 9% will be applicable.
5.2 Eligibility/Recovery Procedure
In line with the introduction of different kinds of schemes and loans the criteria of
eligibility was also set and the recovery procedure was also chalked out for better
management of the schemes and loans. The same is:
Development Loans
a) Installation of tube wells (including cost of power lines upto 8 poles and transformer/Ancillary structure. Pumping sets/lift irrigation pumps (including peter engines) Open Wells Purchase of improved farm machinery (including tractors,, power tillers, implements, cutter binders (reaper wind rover), threshers, trolley, spraying equipment, cane crusher and miscellaneous agricultural equipment, tractor pulled harvesters, self propelled combines.
b) Those types of loans which are advanced for the purchase of items like farm machinery/tractors, irrigation, land development, orchard/green houses, on-farm godowns/storages, dairy, poultry, fishery, livestock farming and are recoverable period exceeding 18 months.
Production Loan
Those types of loans which are advanced for seed, fertilizer, pesticides, labour charges and POL etc. to grow crops and vegetables including working capital for poultry, dairy, orchard, fishery and are recoverable within 18 months.
Farmers of at least 3 acres land holding will be eligible to avail financing
under the scheme provided loan proposal is feasible Terms & condition
for loan under under different schemes.
Type of Security Agri. Land/ Other Tangible SecurityEquity 25%Contribution --Cost of Credit: --LA Form Rs. 20/-Postal RS. 50/- P.A.Charges --Appraisal Fee 1% --Mark-up 9% PA with 1% rebate on timely RepaymentRecovery Period 5 years in half yearly installments with one year
grace periodMaximum Loan Rs. 1 Million per case Limit
5.2.2 Recovery Schedule
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 installment on due date
the markup shall continue to be charged and last installment due to this
may differ from the amount of installments fixed at the time of
disbursement.
5.2.3 Recovery Procedure in case of Default
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Issuance of Notices:
Demand notice is issued before the due date of every installment.
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:
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 favor has decreed a case, account is to be
settled by recovery of amount from the auction of the mortgaged
property. The ZTBL 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 ZTBL may dispose of the mortgaged properties of defaulters
for satisfaction of its dues without intervention of courts under
Financial Institutions (Recovery of Finances) Ordinance 2001.
5.2.4. Rescheduling of Loan Repayment Facility
ZTBL allows rescheduling of repayment of installments to its borrowers in
order to maintain credit discipline and to mitigate their genuine problems
in real hardship cases and in areas declared as calamity hit by the
respective Provincial Governments
The Rescheduling facility is to be considered by the ZTBL on case basis
and is to be allowed on borrowers request only. The relaxation in recovery
period shall not be allowed beyond one year in any case. The borrowers
shall have to execute a supplementary loan agreement on Non Judicial
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Stamp Paper of appropriate value to give legal cover to extended period.
The borrowers shall have to pay the return for the extended period.
Down Payment for Rescheduling of Loans
Rescheduling Rate of down payment as against dueNumber installments to be rescheduled1st 10%2nd 20%3rd 30%Types of Security:
1. Immovable Property2. Movable Property3. Personal Sureties
5.3 Services
5.3.1 Locker Facilities
Apart from its core functional activity marked with country based agri-
business, ZTBL has started to serve its valued customers by offering
lockers facility. Initially, this facility is being offered at about 11 main
branches of big cities. However this facility is not yet extended in Quetta.
5.3.2 Collection of Utilities Bills
ZTBL has recently entered into the customer services section and started
collection of utilities bills. This facility has been started towards its
expansion of commercial banking so that the facilities could be provided
to all its customers/account holders and to the general public. This will
enhance the image and awareness of the ZTBL in the general public.
5.3.3 Hajj Operations facilities
ZTBL has recently stepped forwarded in collection and processing of Hajj
Applications. The forum has been provided to the people to give them
better facility as compared to their competitors. This sector needs a lot of
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improvement and policy making for which the ZTBL is in the process to
build an easy approaching and facilitating policy which should be in the
best interest of the people/general public as well as in the interest of
ZTBL.
6. ORGANIZATIONAL STRUCTURE
6.1 Objective
To transform ZTBL into a progressive, financially viable and self sustained
commercial organization, the Bank was incorporated as a Public Ltd. Company in
the year 2002, with all powers to conduct the business of the company vested in
its Board of Directors. As a step further towards achieving the goals of
restructuring new Organizational Structure of the Bank was approved by BOD in
its 16th meeting held on March 8, 2005 to bring it in line with other Commercial
Banks and to promote quick decision making.
6.2 Scope
Scope to achieve objectives spread over the following areas: Head Office, 6 Audit
Zones, 25 Zonal Offices and 342 Branch offices.
6.3 Key parameters of the Organizational Structure
(i) Elimination of overlapping and duplicity of functions between different divisions/Departments/Units.
(ii) Remain Flexible to relocate Units/Departments for optimum utilization of Human Resource.
(iii) Three tier Management system aimed at quick decision making.
(iv) Reduction in turn around time of services.
(v) Career progression of employees has been linked with merit.
(vi) Functions of Divisions/Departments have been re-defined and aligned with the new objectives of the organization.
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(vii) 25 Zonal Offices have replaced 49 Regional Offices with wider jurisdiction and improved supervisory control to cope with the expanded/enlarged operational requirements.
(viii) Zonal offices have been established keeping in view the volume of business, distance of branches from Zonal offices, availability of ZTBL owned buildings at various stations, geographical proximity of regions, work load/future potential and average number of branches per zone.
(ix) Supervisory and establishment costs are to be curtailed.
(x) Branches have been categorized as large, medium and small depending upon the volume of business.
6.4 Management Tiers
6.5 Parameters of Organization Structure Policy
After conversion of ADBP into Zarai Taraqiati Bank Limited as public limited
company, the process of re-structuring of bank had already begun. The end
objective of this process is to make this bank a progressive, financially viable and
sustainable commercial bank having focus on rural finance with the objective of
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expanding its out reach through innovative package of customer friendly products
and services. This objective cannot be achieved unless Bank recapture lost market
share, improve the infrastructure, create an environment of trust and respect.
In order to run this institution on self sustained basis and to bring about efficiency
in its day to day business, the existing bureaucratic structure has been replaced
besides changing the existing organization’s structure and tiers of management.
The detail is given in the following paras.
Existing designations are abolished. New structure is based on a three tier
management system already mentioned above.
6.6 Span of Control of Different Executives
i) Members of SMT will continue to perform their role and responsibilities as presently defined under the terms of their contract.
ii) SEVP as and when appointed will primarily be responsible for strategic planning, policy making, guidance and critical operational issues.
iii) EVP will be the Operational Incharge of a Division. However, in case of a department of greater importance and wider area of responsibility, an EVP may also head a department in which case EVP will report directly to the functional head, SEVP or the President.
iv) In case an EVP with required qualification is not available, a functional head may temporarily be given the additional charge of an EVP and Divisional Head.
v) SVP may head a department or a designated large zone. Accordingly all existing senior director and directors will become part of senior vice President (SVP) cadre.
vi) A Vice President (VP) may head a cluster of units within a given department, designated small zone or designated large branch.
Accordingly, the existing joint director will form VP cadre. VP wherever posted as Manager of branch will be called Chief Manager.
vii) An Asstt. Vice President (AVP) may head a unit within a given department or designated medium branch.
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viii) Senior Officer (SO) will head a unit or designated small branch or as unit support.
ix) The Officer will perform as a unit support.
6.7 Management Hierarchy/Organizational Chart
The general direction and superintendence of the affairs of the ZTBL are
entrusted to a 09 members Board of Directors consisting of a 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 one non-official nominated by each province. One member on
this board represents the State Bank of Pakistan also.
In ZTBL, the president supervises and directs the senior executive who supervises
and directs the senior voice president, and senior voice president control voice
president, who control Assistant voice president, who finally supervise officers.
The management hierarchy of the ZTBL is as follows;
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Earlier the ZTBL was functioning like a pure government institution and
permission has to be sought on every step for moving forward.
“Now the ZTBL Management Board is fully empowered to run the affairs of the
ZTBL”. More than 2,000 employees of the ZTBL have opted for Voluntary
Golden Hand Shake Scheme, offered by it to its employees.
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7. FUNCTIONAL SETUP
There are different divisions working in ZTBL. They are: (1) Human Resource