- NBP decides to reduce its pricing by 1 pc for small farmers
While country’s agriculture has been witnessing a visible reduction in crops, Zarai Taraqiati Bank Limited (ZTBL) has so far declined to decrease markup rate on agriculture loans, saying bank’s financial circumstances do not permit decreasing the markup.
ZTBL CEO Syed Talat Mahmood refused to decrease markup rate on agriculture loans and turned a deaf ear to the persistent demand of country’s farmers, as well as agriculturists of treasury benches in National Assembly.
The bank said our financial circumstances do not permit to decrease the markup rate as the same is already competitive in the market. However, ZTBL may consider the issue of a decrease in the markup rate on agri-loans if a credit line/special funds or upfront subsidy on markup rate is provided by the government/other agencies. However, the National Bank of Pakistan (NBP) has decided to reduce its pricing by 1 per cent for small farmers, official documents available with Pakistan Today.
On the other hand, the NBP while considering the importance of agri sector in the national economy has decided to further reduce its pricing by 1pc — from 13.5pc to 12.5pc for small farmers with financial requirements up to Rs 5 million for loans extended against agri passbooks only.
The NBP said the economy of Pakistan depends heavily on agriculture as it is the base of country’s foreign trade.
The State Bank Pakistan has allocated agro-credit disbursement target to all specialised/commercial/private banks/DFIs, against which the exclusive share of the ZTBL works out to around 20pc whereas rest of institutional credit is being provided by other banks/DFIs.
At present, the markup rate of ZTBL on production loans stands at 15pc and 15.80pc on development loans, while the markup rate of the NBP is at 15.50pc per annum, Bank Alfalah at 15pc, BoP at 17pc, Askari Bank Limited 18pc, PPCBL at 18pc and ABL at 18pc.
Pakistan Muslim League-Nawaz (PML-N) government came under ‘friendly fire’ in the National Assembly on 1st February when a group of agriculturalists from the treasury benches accused it of treating farmers like an ‘enemy’.
Through a calling attention notice, Sheikh Fayyazuddin of Rahim Yar Khan, lawmakers Rana Mohammad Hayat Khan and Rasheed Ahmed Khan launched a scathing attack on the government’s lending policies for farmers, saying that the ZTBL was charging them over 16pc markup, as opposed to the 5.75pc given to banks by the SBP. Moreover, farmers across the country found protesting against high markup rate of the ZTBL for a long time. But the ZTBL has so far declined to decrease the markup rate on agriculture loans despite the fact that agriculturist from government and opposition sides are all out to get the rate fixed at a single digit.
It is pertinent to mention here that currently, the (benchmark) interest rate by the State Bank of Pakistan (SBP) is less than 6pc. Banks give loans at 6-7pc to industries.
National Assembly’s Standing Committee on Finance has approved a resolution unanimously requesting the government to reduce the markup on agriculture loans to a single digit.The meeting was presided over by Qaiser Ahmad Sheik held on March 15, 2017 at parliament lodges, Islamabad.
