This document outlines three credit schemes to enhance access to finance for agricultural networks in Afghanistan. It discusses the goals of developing Sharia-compliant loan products and simplifying the application process. Under Credit Scheme 1, financial institutions would directly lend to entities like ag depots. Credit Scheme 2 involves a supplier providing inputs to borrowers and acting as a reference for loans. Credit Scheme 3 has suppliers receiving loans and on-lending to networks. The document provides details on eligible borrowers, required documents, potential financial products, and FAIDA's role in facilitating the application process.

1. Farm Service Centers, Agdepots and
Veterinary Field Units Credit Systems
Development

2. Agenda
 Goals and Objectives
 Financial products offered by Financial
Institutions
 Financial Institutions criteria and requirements
 Credit Scheme 1: Direct Lending
 Credit Scheme 2: Reference through Supplier
 Credit Scheme 3: Supplier on-lends to agriculture
networks
 Steps to obtain finance

3. Goals and objectives
• Develop different credit programs to enhance
access to finance for existing agricultural
networks (Agdepots, Farm Services Centers,
Veterinary Field Units)
• Design and implement Sharia-compliant
wholesale and on-lending loan products
• Develop procedure to simplify the process of
applying for loan
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4. Agriculture Sector Stakeholders
Financial
Intermediaries
Non-financial
Intermediaries
Potential borrowers
Commercial Banks,
Finance Companies
Suppliers Processing Facilities,
distribution agencies
Leasing Companies, Farm Service
Centers
Farm Stores, Ag
Depots, VFUs
Microfinance
Institutions
Associations,
Cooperatives
Agents, Farmers
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5. Access to Finance
FAIDA’s role to facilitate access to finance for the
following agriculture stakeholders including but
not limited to:
 Large Suppliers, Wholesalers, farmers
 Ag Depots, Farm Service Centers, Veterinary
Field Units
FAIDA will work closely with the following financial
institutions
• Specialized Agriculture Funds/Finance Companies
• Commercial Banks
• Microfinance Institutions
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6. Potential Financial Institutions (Fis)
 Agriculture Development Fund
 Ghazanfar Bank
 Pashtani Bank
 Azizi Bank
 Afghanistan Rural Finance Company
 First Microfinance Bank
 Afghanistan United Bank
 Microfinance Institutions (Oxus, FINCA)
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7. Lending products
 Islamic lending products
• Murabaha
• Musharakah
• Mudarabah
• Ijara
 Conventional loans
• Agriculture loans
• Individual Loans for various purposes
• Group Loans for micro-credits
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8. Sharia Compliant Lending products
• No cash – buy & sell transaction
• Asset backed products
• Profit and risk sharing
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9. Murabaha
Murabaha is a particular kind of sale where the
transaction is done on a “cost plus profit”, basis
i.e. the seller discloses the cost to the buyer and
adds a certain profit to it to arrive at the final
selling price.
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10. Musharakah
Musharakah means a joint enterprise formed for
conducting some business in which all partners
share the profit according to a specific ratio while
the loss is shared according to the contribution
ratio
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11. Mudarabah
This is a kind of partnership where one partner
gives money to another for investing in a
commercial enterprise. The investment comes
from the first partner who is called “Rab-ul-Mal”
(Investor). The management and work is an
exclusive responsibility of the other, who is called
“Mudarib” (Working Partner). Profit is shared as per
agreed ratio. In case of Mudarbah all losses are
borne by Rab-ul- Mal.
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12. Ijarah
Ijarah related to the usufructs of assets and
properties, and not the services of human beings.
‘Ijarah’ in this sense means ‘to transfer the usufruct
of a particular property to another person in
exchange for a rent claimed from him.’ In this case,
the term ‘Ijarah’ is analogous to the English term
‘leasing’. Here the lessor is called ‘Mu’jir’, the
lessee is called ‘musta’jir’ and the rent payable to
the lesser is called ‘ujrah’.
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13. Conventional lending products
 Disbursement of actual cash
 Clear interest rate calculation
 Credit – Debtor relationship
 Fixed loan duration
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14. Pros and cons of loans
Pros
 Alternative access to
finance, not depend on
credit sale
 Fee on credit sale is
higher to compare with
loan charges
 More options to buy
agro inputs from
various suppliers
 Legal contract with FI
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Cons
 Repayment schedule
not always support
agriculture activities
 Procedures takes time
(loan process and
approval)

15. Financial Institutions’ criteria
 Legal business activity/operation
 Registered with AISA/MAIL or other agency
 Financially sustainable for the last 2 years
 Good history purchase of agro inputs
 Location of business in relatively secure place for
loan monitoring & follow up
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16. Financial institution’s requirements
 Detailed explanation of use of loan
 Existing market opportunities
 Legally registered collateral
 Borrower should contribute to the finance
transaction from his own resources
 Repayment period should be 1 year
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17. Lending documents required
 Concept Note
 Balance Sheet (2 years)
 Income Statement (2 years)
 Cash Flow Projection (optional)
 Copy of license given by AISA or other
governmental agency
 Copy of collateral papers: Qabala, or legal title
 Copy of National ID (Tazkera)
 Other documents upon request
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18. Required Collateral and/or guarantees
 Personal property: land, buildings
 Equipment (optional)
 Third party guarantee (optional)
 Purchase Order (optional)
 Signed contract with MAIL or other agency
(optional)
 A loan to security ratio could be 1:1.5
(100%/150% security to the loan)
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19. Additional Information
 Make sure that business place could be
monitored and visited any time
 Make sure to provide original documents for
collateral
 Make sure information provided match the real
situation, provide with real picture
 Get recommendations from local community
leaders if necessary
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20. Credit Scheme 1
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Financial
Institutions
Ag Depots,
Farm Service Centers,
Veterinary Field Units
FAIDA will
facilitate
preparation of
Concept Note
and financial
statements
FAIDA will
provide with
basic info and
due diligence,
provide clients
with FI’s
requirements
FAIDA

21. Credit Scheme 1 - Description
 Financial Institutions disburse the loans
directly to the AG, FSC and VFU
 FAIDA will facilitate preparation of Concept
Note and financial statements
 FAIDA will provide with basic info and due
diligence to FIs, and provide clients with FI’s
requirements
 FAIDA will play a vital role in lending process
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22. Credit Scheme 2
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Loan
foragro
inputs
Docum
entsforloan
Agro inputs, no cash
FI transfers the
loan funds to
Supplier
FS, AG, VFU
submit
documents to FI
for approval

23. Credit Scheme 2 - Description
 Supplier provides agro inputs to Farm Stores, Ag
Depots, VFUs
 Supplier provides information & recommendations to
FI for funding of potential borrower
 Borrower submits all required documents to FI
 FI conducts a due diligence and approves a loan
 Borrower and FI sign a loan contract
 Supplier releases agro inputs to Borrower, no cash
disbursement to borrower
 Borrower repays a loan directly to FI
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24. Credit Scheme 3 Financial
Institutions
Supplier
Ag Depots,
Farm Service Centers
Vet Field Units
Loan
Loan
Repayment
Repayment
FAIDA
Supplier on-lends
to AG, FS, VFU Technical
support in
extending
the loans

25. Credit Scheme 3 - Description
 Financial Institutions disburse the loans directly
to Suppliers
 Supplier on-lends to Farm Service Centers, Ag
Depots, VFUs
 Supplier has a full responsibility for loan
repayment
 Sales based on traditional credit system
 FAIDA provides technical assistance to Suppliers
and farm service centers, agdepots and VFUs.
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26. Steps to obtain finance
 Meet with FAIDA representative / Regional
Coordinator
 Reason for borrowing
 Type of business
 Location of business
 Number of employees
 Financial Statement
 Collateral
 Other information upon request
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27. Procedure
 Regional Coordinator will assist borrower in filling
out Concept Note and Financial Projection
 Submit documents to FAIDA Kabul Office
 FAIDA will discuss it at the Pre Banking Review
Committee
 If approved, it will be submitted to relevant FI for
further processing
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28. FAIDA office location
Location Name E-mail Phone Number
Mazar Naqibullah
Azizpur
nazizpur@faida.af 0794501303
Jalalabad Faridoon
Awalkhil
fawalkhil@faida.af 0793507024
Kandahar Waleed
Sahibzada
wsahibzada@faida.af 0793499395
Herat Zahir Shirzai msherzai@faida.af 0793587721
Kabul Farida Akbar afarida@faida.af 0794501157
Kabul Mahdi Parsa mparsa@faida.af 0797469180
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29. THANK YOU!!!
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