Value Chain Financing Sarsabz Karobar

Khushhalibank was established in the year 2000 as the country’s first licensed microfinance bank. Today, with a 18% market share it is the largest retail microfinance Institution in Pakistan serving the microenterprises in urban and Agriculture/Livestock businesses in rural areas.

Dec-2014

•Active Clients (In million) 0.9

•Active borrowers (In million) 0.47

•GLP (In PKR billions) 12.2

•Deposit (In PKR billions) 8.6

•Active Women borrowers 26%

•Branches 118

•Total Staff 2,622

•Total Assets(In PKR billions) 16.7

•OSS 126.6%

•FSS 123%

•PAR>30 0.92%

Institutional Highlights

Deposit DistributionValues in PKR billion( Total: 8.6 billion)

GLP DistributionValues in PKR billion( Total: 12.2billion)

Branch Network ( Total: 118 Branches)

2013 to 2015 comparison Portfolio Mix

Disbursement Values in PKR billion

2013

2014

2015

Why Value Chain Financing?

• Value Chain Financing (VCF) offers an opportunity to increase scope and reduce the cost and risk of financing to agriculture and rural microenterprises. It can help value chains to be more inclusive by making resources available for smallholders to be integrated into higher value market opportunities.

• “Sarsabz Karobar” offers opportunities to business entities to expand the financing opportunities across select value streams, improve efficiency and repayments in financing and consolidate linkages amongst participants in the chain.

•

KBL Value Chain Model

Value Chain Partner

End user

KBL

Input Supplier

Growers

List of registered potato growers

Pesticides, seeds, Fertilizer supplied.

Loan facility

Payment made from loan amount

Produce sold to VCP

Loan settlement

Produce supplied to End user

Payment made

Supplier account

Settlement of credit line of growers via standing instructions

VCP : Value Chain Partner

KBL Value Chain Product

Brand Name: Sarsabz Karobar

Security : Clean Lending- Cash Flow based. Loan backed by facilitation in collection by Value Chain Partner (VCP).

Loan Ticket: Rs. 10, 000 to Rs. 150,000

Pricing: 25% (declining balance)

Loan Tenure : 3 to 12 months (Crop Cycle)

Pilot: In the last week of August 2013 pilot was conducted

at Swabi for potato crop with 148 growers.

KBL Value Chain Lending Process Flow

VCP : Value Chain Partner

The Troika & its benefits

Bank

•Large untapped market

•Growth opportunity

•Rationalize cost

•Mitigates credit risk

•

Farmer

•Access to finance

•Quality inputs at door step

•High quality seed – Higher yield

•Less input cost – Selected Suppliers for VC

•Free of cost technical advisory services

•Secure sales- buy back agreement

•Produce grading – for different end users

•Access to large market/ franchises

•Free packaging and Transportation

•No commission to Arthi/Middleman

•Alternate cropping ( Potato replaced Tobacco in

Swabi and Mansehra)

VC Partner •Quality Produce at reasonable price •Scaling up opportunity •Consistent supplies ( Registered farmers) •Addressing the needs of various high end/retail market segmentation•Employment/ Entrepreneurship creation ( suppliers, collection center, Fresh Mart ( micro franchises) etc

–

Farmer’s cost saving compared to conventional model

Component % cost saving

Seed 15%

Fertilizers 5%-10%

Packaging cost 100%

Transport 100%

Commission (Arthi) 15%

Comparatively better crop price due to large buyer/processor and produce sorting

KBL Value Chain Partner-CAVC

VCF for Agri Growers

KBL commenced its 1st value chain financing pilot by partnering with CAVC – a registered firm which supplied ‘Lady Rosita’ potatoes to PepsiCo International for the manufacture of ‘Lays’ potato chips. The pilot was kicked-off at Swabi branch was later replicated at 11 locations with CAVC for different crops.

Locations: Swabi, Swat, Mardan, Nowshera, Hasan Abdal, Haripur

Abbotabad, Manshera,Okara, Faisalabad, Khushab.

Crop wise distribution:

Number Disbursement in PKR

Number Disbursement in PKR

Number Disbursement in PKR

Number Disbursement in PKR

Number Disbursement in PKR

Number Disbursement in PKR

1,225 137,640,000 96 6,578,000 26 2,300,000 171 16,350,000 90 13,500,000 1,608 176,368,000

TotalPotato Peas Onion Maize Peach

CAVC Supply Chain

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

SowingHarvesting

Radish

Oct Nov

Crop Calender Jan Feb Mar Apr May Jun Jul Aug Sep

Tobacco

Tomato

May Jun

Potato

Cabbage / Cauliflower

Water Melon

Dec Jan Feb Mar Apr

Chilies

Green Beans

Onion

Garlic

Maize

Pea

Wheat

VCF Outreach

2013 2014 20151 6 28

VCF Location Tenure Loans3-6 24%7-12 76%

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