Q.1    State True or False in the answer column. Give brief reason for your selection at the space           provided below the question:                                                                                               (10)
                                                                                                                                                 (Answer)

i	While extending Agric financing, the bank/DFI should take into account the total indebtedness of the borrower and his disposable income.
ii	While advancing loan to livestock, the bank/DFI may mandatory accept livestock as security.
iii	The loans for livestock will be classified as loans for purchase of machinery & equipments.
iv	All facilities, except those secured against liquid assets, extended to SMEs shall be backed by the personal guarantees of all directors other than nominee directors.
v	Banks/DFIs are free to determine the margin requirements provided by them to clients, without taking into account the risk profile of the borrower(s).
vi	The restrictions prescribed for Corporate/ Commercial banking will not be applicable in case of SMEs financing.
vii	Crop Growth Index (ICG) is estimated by dividing the growing degree days available with the days required for a crop.
viii	Intensity and Nature of land cover is a criteria of classification of geography.
ix	The First Tenancy Act in Sindh province was passed in 1950.
x	Liquidity ratios indicate the firm’s ability to meet its maturing long term.

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

i	The cropping intensity of Farm may rises by _________ percent, through mechanization. A) 25%      B) 35%       C) 40%      D) 45%        E) None of the above
ii	There are _________ main indicators of financial strength of a firm. A) 2          B) 3         C) 4           D) 5          E) None of the above
iii	Banks/DFIs are allowed to take clean exposure i.e. facilities solely against personal guarantees, on a SME up to Rs 3 million provided that funded exposure should not exceed Rs.________ million. A) 1 million                   B) 2 million                       C) 3 million D) 4 million.                  E) None of the above
iv	Per capita consumption of Fish in Pakistan is just _______ per annum. A) 1 kg       B) 2 kg     C) 4 kg      D) 6 kg           E) None of the above
v	Co-efficient of variation (CV) of vegetables is: A) SDW/RW          B) SDV/RV                  C) SDW/RV D) SDV/RW           E) None of the above
vi	For analyzing the financial statements, the banker always wishes to evaluate indicator: A) the financial soundness & stability B) the liquidity position          C) the profit/ earning capacity of borrower D) All of above                      E) None of the above
vii	The Land Reforms were introduced in 1887 with objective. A) To increase agric production B) To raise income & living standard of farmers C) To remove social inequality D) All of above                           E) None of the above
viii	Aridity is estimated by dividing the _________ percent profitability of monthly rainfall with the actual crop evapo-transpiration. A) 30%    B) 50%     C) 60%      D) 70%         E) None of the above
ix	Through mechanization, the yield of farm may rises by ________ percent. A) 25%      B) 35%     C) 40%     D) 45%         E) None of the above
x	Annual Development Plan is prepared by: A) SBP                     B) NCCC              C) ACAC D) Finance Ministry                                  E) None of the above

Q.3 Inayat Farm has approached Royal Bank for a credit package comprising fixed asset financing and working capital financing aggregating Rs 2 million. They have provided financial statement for the current period. Analyze the financial strength of Inayat Farm, with the help of balance sheet and Profit & Loss statement given below: (20)

Balance sheet		Profit & Loss statement
Current Assets			(Rs. 000)
Cash	80	Sales	4000
Accounts receivables	1000	Cost of goods sold	2400
Inventory	1200	Gross Margin	1600
	2280	Sales expenditure	300
Net fixed assets	3000	Administrative expenses	200
Total Assets	5280	Other expenses	100
Current Liabilities		Total expenses	600
Accounts payable	300	Operating profit	1000
Notes payable	200	Interest expense	60
	500	Income tax	160
Long term liabilities	1400	Net Profit	780
Total liabilities	1900	Dividend Paid	180
Owners equity	1800	Retained Earnings	600
Retained earnings	1580
Total liabilities & Net worth	5280

Q.4 Break Even Analysis, is a tool to determine the viable level of firm’s operation. Explain it with the help of diagram. (10)

Q.5 What information & Procedure are adopted ideally by a Mobile Credit Officer for formulating a proposal for agric financing. (10)

Q.6 Describe potential benefits & significant weaknesses of a farmers’ Cooperatives. What measures do you suggest to enhance benefits and to eradicate weaknesses from the cooperative system. (10)

Q.7 The lending bank if wishes to avail the benefits of collateral, what provision are there to determine the value of assets pledged/mortgaged under uniform criteria as discussed under SME Prudential Regulation-11. (10)

Q.8 Analyze the process and efficiency gains of the “Point Scoring System” in SME Financing? (10)

Q.9 While sanctioning SME credit irrespectively documentation is always proved a significant barrier. Argue & suggest measures to overcome the problem. (10)