Rural Bank 
                      Franchising 
                          Model
                      Ali Raza
                      Head Agri & Agri SME
                      Faysal Bank Limited
    Key Issues Faced by the Farming 
    Community
       Low agricultural yield caused by:
        o Primitive agronomic practices
        o Non-availability of quality farm inputs
        o Lack of mechanical support
        o Natural Calamities
       Inequitable marketing system resulting in lower incomes
       Exorbitant interest charged by the agricultural middleman 
        (Arhti) on the credit provided to the farmers in cash or in kind.
       Inadequate availability of the institutional credit:
        o Documentary and procedural hassles involved in the 
          institutional lending.
        o Banks’ lukewarm approach towards Agri financing
   Factors underlying  the banks passive attitude towards 
   Agri lending:
      Higher intermediation cost
      o Low ticket size
      o Distance and time involved in the lending process
      o Capacity issues
      Higher NPLs eroding banks’ profitability:
      o Wrong selection of the borrowers
      o Poor post disbursement follow up for recovery 
      o Farmers’  lower  incomes  hampering  their  repayment 
        capacity.
      o Wilful defaults nurtured by inefficient enforcement of 
        the legal framework.
    Franchising Model
    The Rural Bank Franchising Model formulated and currently under 
    testing cum implementation phase at FBL envisages induction of 
    third  party  service  providers  (SPs)  willing  and  capable  of 
    performing their role under a tripartite arrangement.
    The model aims at addressing the chronic issues faced by both 
    small and medium sized farmers and the financial sector of the 
    country. The model is innovative and unique in the sense that its 
    underlying concept has never been practiced before in Pakistan, 
    at least at institutional level. The model does not only take care 
    of  the  impediments  faced  by  the  farmers  in  availing  the 
    institutional  credit,  it  also  addresses  farmers’  core  issues 
    discussed earlier. The model also caters to the issues faced by 
    the  banks  in  marketing,  selection  of  good  and  progressive 
    farmers, ensuring proper end use of the financed amount and 
    finally in timely recovery of the advanced funds. The model also 
    aims  at  increasing  agricultural  productivity  to  achieve  the 
    national goal of poverty alleviation currently rampant among the 
    rural community and consequently enhancing contribution of the 
    agriculture in the country’s GDP.
     Franchising Model:
                                  Service 
                                  Service 
                                  Provider
                                  Provider
                              * Selection of borrower
                              * Selection of borrower
                              * Inputs and Mechanical 
                              * Inputs and Mechanical 
                              Support
                              Support
                              * Technical /Advisory 
                              * Technical /Advisory 
                              services
                              services
                              * Assistance in Recovery
                              * Assistance in Recovery
                                                 Growers
                     Bank                        Growers
                     Bank                    * Adherence to the 
                                             * Adherence to the 
                * Provision of Timely Loans   guidelines of service 
                * Provision of Timely Loans   guidelines of service 
                                              provider.
                * Ensure SP performs as       provider.
                * Ensure SP performs as 
                 per  Agreement              * Proper use of Borrowed 
                 per  Agreement              * Proper use of Borrowed 
                                              Funds
                * Portfolio Health            Funds
                * Portfolio Health
                                             * Repay Dues and Liabilities
                                             * Repay Dues and Liabilities