KARACHI: State Bank of Pakistan issued a descriptive circular to Banks and Development Financial Institutions (DFIs) asking them to participate in the scheme for expanding agriculture production-as working capital/finance to Farmers and Small and Medium enterprises (SMEs) to flood affected areas at district level.

Under this scheme a bearable/ concession rate mark-up will be provided through DIFs and Banks around Rs.10 billion have been allocated, said the State Bank.

The Scheme will offer to banks at the rate of 5 per cent per annum. The banks will be permitted to charge a maximum spread of 3 per cent from the borrowers, therefore credit to SMEs and farmers will be available at 8 per cent. Mark-up will be paid on quarterly basis.

The Bank said that agriculture credit is meant only Farm credit to meeting the production or working capital.

This scheme will be effective for up-to October 31, 2011.