The Crop Loan Insurance Scheme, initially introduced in 2014, has been expanded to cover all major field crops in Pakistan. This scheme facilitates collaboration among commercial banks, microfinance banks (MFBs), and insurance companies to provide insurance coverage for agricultural production loans.
Participants
- Banks and MFBs: All commercial banks and microfinance banks involved in agricultural lending.
- Insurance Companies: General insurance companies interested in participating in the scheme.
Clients’ Eligibility
- Borrowers: Farmers availing Agri Production Loans from Banks/MFBs.
- Qualification: Farmers’ names and their crops must be recorded in the Land Revenue record. The scheme extends to tenants and lessees as well.
Applicability
- Loans Covered: All agriculture production loans disbursed by banks/MFBs.
- Crops Covered: Major crops include Wheat, Rice, Sugarcane, Maize, and Cotton.
Risks/Perils Covered
- Covered Risks: Indemnity for production loss due to natural calamities (e.g., rain, hailstorm, flood, drought) and crop diseases (e.g., viral, bacterial, infestation like locust attacks).
Coverage Period
- Insurance covers from sowing/transplanting to harvesting, with specific provisions for crops like sugarcane and fruits.
Sum Insured
- Based on per acre borrowing limits set by the State Bank, subject to mutual agreement between banks/MFBs and insurance companies.
Premium Rate
- Maximum of 2% per crop per season, inclusive of standard levies.
Premium Payment
- Collection: Banks/MFBs collect premiums upfront from farmers, depositing them into insurance companies’ designated accounts.
- Subsistence Farmers: Premiums for farmers with landholdings up to 25 acres paid upfront by banks/MFBs to insurance companies.
Indemnification
- Valid claims are payable upon:
- Area declaration as Calamity Affected by Provincial Government.
- Crop damage due to insured perils.
Payment of Claims
- Insurers reimburse banks/MFBs for ultimate credit to borrowers’ loan accounts within 30 days of calamity notification.
Government’s Role, Contribution & Financial Support
- Premium Subsidy: Government subsidizes insurance premiums up to 2% per crop per season for small and medium farmers (up to 25 acres).
- Verification & Reimbursement: SBP verifies claims before MOF ensures prompt reimbursement to banks/MFBs.
Operational Details
- Data Sharing: Banks/MFBs facilitate insurance companies with necessary data promptly.
- Selection of Insurance Companies: Transparent selection via competitive processes managed by Boards of Directors.
- Media Campaign: Awareness campaigns conducted by Banks/MFBs/insurance companies to educate farmers on institutional credit benefits.
Faqs for Crop Loan Insurance Scheme 2014 Extended to All Crops
What is the objective of the Crop Loan Insurance Scheme?
The scheme aims to provide insurance coverage for agricultural production loans, protecting farmers from financial losses due to natural calamities and crop diseases.
Who can participate in the Crop Loan Insurance Scheme?
Participants include all commercial banks, microfinance banks (MFBs), and general insurance companies involved in agricultural lending and insurance activities.
Who is eligible to benefit from the Crop Loan Insurance Scheme?
Farmers availing Agri Production Loans from Banks/MFBs, including tenants and lessees whose names and crops are recorded in the Land Revenue record.
What loans and crops are covered under the Crop Loan Insurance Scheme?
All agriculture production loans disbursed by banks/MFBs are covered, including major crops such as Wheat, Rice, Sugarcane, Maize, and Cotton.
What risks and perils are covered by the Crop Loan Insurance Scheme?
The scheme indemnifies against production loss caused by natural calamities (e.g., rain, hailstorm, flood, drought) and crop diseases (e.g., viral, bacterial, infestation like locust attacks).
What is the coverage period for the Crop Loan Insurance Scheme?
Insurance covers from sowing/transplanting to harvesting, with specific provisions tailored for crops like sugarcane and fruits.
How is the sum insured determined under the Crop Loan Insurance Scheme?
Sum insured is based on per acre borrowing limits set by the State Bank of Pakistan, subject to agreement between banks/MFBs and insurance companies.
What is the premium rate for the Crop Loan Insurance Scheme?
The maximum premium rate is 2% per crop per season, inclusive of standard levies.
How are premiums collected under the Crop Loan Insurance Scheme?
Premiums are collected upfront by banks/MFBs from farmers and deposited into designated accounts of insurance companies.
How are claims processed and paid under the Crop Loan Insurance Scheme?
Valid claims are paid upon declaration of the area as Calamity Affected by the Provincial Government and confirmation of crop damage due to insured perils, with insurers reimbursing banks/MFBs within 30 days.
What is the government’s role and financial support in the Crop Loan Insurance Scheme?
The government subsidizes insurance premiums up to 2% per crop per season for small and medium farmers (up to 25 acres), and verifies claims through SBP before prompt reimbursement to banks/MFBs.
Conclusion
The expanded Crop Loan Insurance Scheme aims to mitigate financial risks for farmers across Pakistan, ensuring sustainable agricultural practices through enhanced credit accessibility and risk management. By fostering partnerships and providing governmental support, the scheme aims to safeguard farmers against unforeseen production losses, thereby promoting agricultural productivity and economic resilience.