Governor State Bank of Pakistan (SBP) Dr Reza Baqir praised banks for their efforts to rise lending to the agriculture sector, which reached a historic high by the end of the fiscal year 2018-19.
Governor chaired the annual meeting of the Agricultural Credit Advisory Committee (ACAC) held in Peshawar. He said in his keynote address that “It is for the first time in Pakistan’s history that credit to the agriculture sector has surpassed Rs 1 trillion”.
He advised the banks to encounter qualitative aspects of the assigned targets as well in line with the strategic shift and key policy actions taken by the SBP for agricultural financing.
He highlighted that most of the banks achieved their assigned targets in agriculture sector except for some including Zarai Taraqiati Bank Limited (ZTBL), Punjab Provincial Cooperative Bank Limited (PPCBL), some domestic private banks and Islamic banks, which fell short of the targets.
He urged the banks and institutions to increase their efforts and commitment to ensure the achievement of agriculture credit targets in the underserved provinces and regions.
He pointed out that the SBP was considering three policy actions to further promote financial inclusion in the agriculture sector.
First, it wants to enhance transparency through disclosure of bank-wise performance statistics on a monthly basis covering agriculture credit disbursement, geographical distribution, outstanding amount, number of borrowers and agriculture credit infrastructure. Second, it seeks to introduce a comprehensive scoring model for the ranking of banks based on key agriculture credit indicators and targets. Third, it will introduce incentives and penalties based on the performance scores of banks.
It was shared that the overall agriculture credit disbursement target of Rs1,350 billion had been assigned to banks for FY20, which was 89% of the total estimated credit requirement of Rs1,518 billion in agriculture sector.
It was highlighted that Islamic banks and Islamic branches of commercial banks had been assigned the disbursement target of Rs110 billion for FY20 in agriculture sector, which was in line with the previous year to help realise the potential of Islamic agriculture financing in Pakistan.
Furthermore, the overall target of outstanding borrowers was enhanced to 4.67 million with the addition of 650,000 new borrowers in agriculture sector of Pakistan.
The committee deliberated on the new directions in agriculture financing by focusing on technology, especially the digitalization of agriculture loan processes through the adoption of Land Record Information Systems, Electronic Warehouse Receipt Financing System and initiatives like the Kissan Digital Portal. These were key priorities under the National Financial Inclusion Strategy 2023.
Senior officials of federal and provincial governments, presidents/CEOs of banks of Pakistan, members of provincial chambers of agriculture, progressive farmers, representatives of Khyber-Pakhtunkhwa farming community and SBP officials attended the meeting.