SME & Agricultural Finance - Stage-III
ISQ Examination (Summer-2007)


Q.1
State True or False in the answer column. (15)
i
Under the SBP Revolving Credit Scheme banks/FIs extend loans for three years with the condition to clean-up the mark-up once in a year.
ii
Under the Prudential Regulations for Agriculture banks/FIs are required to disburse the long term loan within 15 days after the completion of all formalities.
iii
Financing to agri processing industries comes under agricultural financing subject to the condition that at lease 50% of the producer is processed by the farmer himself.
iv
For livestock financing banks/FIs is required under SBP guidelines to disburse loans against the security of passbook in addition to the cattle/animal.
v
Non issuance/ incomplete Passbook is the main impediment in disbursement of agri loans in Sindh.
vi
Under the current SBP regulations/policies banks are given mandatory targets for agri financing and non-compliance attracts panel action.
vii
Under the SME Prudential Regulations banks can take exposure to SME up to Rs. 3 million without any collateral.
viii
Agriculture is the single largest sector in Pakistan’s GDP.
ix
Non-crop credit includes financing for livestock, poultry, fisheries and horticulture.
x
Major impediments in lending to SME is non availability of collateral, lack of information, unawareness about banking facilities, etc.
xi
Report on the Estimation of Agricultural Credit Requirements was updated by SBP in 2006.
xii
Depreciation is the gain in worth of an item during a year.
xiii
Intangible assets are called Fictitious assets.
xiv
Liquidity measures the capability of a firm to generate funds.
xv
Low risk generates need for higher compensation.
xvi
There is no difference between arboriculture & sericulture.
xvii
Wheat is ideally cultivated in marshy areas.
xviii
Mechanization is meant Tractorization in the country.
xix
Crop Growth Index is based on the quantity of rainfall.
xx
During Green Revolution, livestock sector has also registered record growth rates.
xxi
Profit indicates the repaying capacity of a firm.
xxii
At Break even point revenue is always in excess of total cost.
xxiii
Short term financing is a loan for a period always less than a half year.
xxiv
Inflation rate is a gross source of distortions in the whole exercise of measuring the costs & benefits.
xxv
Acid Test Ratio is also called the Quick Ratio.
xxvi
Quick Ratio is calculated like Current Ratio.
xxvii
Current Ratio is used to measure the ability of a firm to meet the current bills & the obligations.
xxviii
Liquidity Ratios indicate the firm’s ability to meet its maturing long term obligations.
xxix
Solvency Ratios measure the ability of a firm to meet the short term debts, claims & the obligations.
xxx
Working capital ratio helps in determining the ability of a firm to cope with its current liabilities.

Q.2 Please write the alphabate of selected choice in the answer column: (10)
i

Under Prudential Regulations for agricultural financing banks can provide clean lending up to:

A) Rs. 100,000/-            B) Rs. 200,000/-                      C) Rs. 350,000/-
D) Rs. 500,000/-            E) Above Rs 500,000/-

ii

The share of disbursement to farm sector by the banks in 2005-06 is:

A) 50%           B) 75%              C) 85%              D) 100%              E) Less than 50%

iii

The maximum tenure for livestock financing by banks would be:

A) 5 years (including grace period)                  B) 5 years (excluding grace period)
C) 3 years (including grace period)                  D) 3 years (excluding grace period)
E) None of the above

iv

Under livestock guidelines the indicative maximum financing/loan limits for term finance is:

A) 20% of the actual cost             B) 60% of the actual cost                  C) 80% of the actual cost
D) 90% of the actual cost             E) None of the above

v

The number of total farmers in Pakistan are:

A) 5.3 million                               B) 7.0 million                                      C) 6.6 million
D) More than 8 million                 E) None of the above

vi

The SME sector contributes ____to Pakistan’s GDP:

A) 10%          B) 15%              C) 20%               D) Over 30%              E) None of the above

vii

The sub sectors of SME comprises of:

A) Trading                                            B) Trading and Manufacturing
C) Manufacturing and Services              D) Trading and Services                     E) All of the above

viii

The banks including specialized banks, five big banks and domestic private banks disbursed Rs.______ billion during July 2005 to June 2006.

A) 104          B) 127             C) 137                    D) 160                   E) None of the above

ix

In Pakistan SME sector comprises of ______________ business units.

A) 1 million               B) Less than 2 million                              C) 3.2 million
D) 4.2 million            E) None of the above

x

In Pakistan over 99% business units employ less than __________ persons.

A) 150                     B) 175                                         C) Less than 99
D) Above 200          E) None of the above


Q.3
Evaluate the procedure for regularization of the Non-performing loans under Agricultural Prudential Regulation # 15. (10)

Q.4
What are the minimum conditions for taking an exposure by a Bank / DFI under Regulation # 8 of the SMEs Prudential Regulations. (10)

Q.5 Discuss specific Managerial Problems & their way out in a Small Enterprise. (10)

Q.6
What are the major supply side and demand side issues and impediments in the flow of banks’ credit to agriculture sector in Pakistan? (10)

Q.7
What are the main objectives of Agricultural Credit Advisory Committee (ACAC)? (05)

Q.8 What are the salient features of SBP Guidelines for Livestock Financing? (10)

Q.9 What initiatives are taken by SBP to develop SME Finance in the country? (10)

Q.10 What are the salient features of SME Policy designed by SMEDA? (10)