SBP asks banks to enhance agri credit target to Rs1.250tr

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KARACHI: State Bank of Pakistan (SBP) Governor Tariq Bajwa has asked the chief executive officers (CEOs) of the banks to enhance the agri credit target up to Rs1.250 trillion for the current fiscal year 2018-19 to bring qualitative shift in agri financing by adopting innovative techniques for provision of easy and swift credit to small farmers.

Chairing the Agricultural Credit Advisory Committee (ACAC), the governor shared, “Agricultural credit is one of the top priorities of the government.”

The annual meeting of the ACAC was held for the first time in Muzaffarabad, Azad Jammu & Kashmir, as part of the SBP’s continued efforts to enhance agri credit in underserved provinces and regions. He also reviewed the progress on agri credit targets of FY 2017-18.

The governor appreciated the efforts of commercial banks, microfinance banks and microfinance institutions for nearly achieving the targets.

The banks disbursed Rs972.6 billion, which was over 97 per cent of the assigned target and 38 per cent higher than 2016-17.

In terms of agri credit demand, the banks met 72 per cent of the total requirement compared to 57 per cent last year. The agri lending banks/institutions added 450,000 fresh borrowers during the year.

In his keynote address, Bajwa highlighted that most of the banks met their assigned targets, however, banks including ZTBL, PPCBL, and some of the domestic private banks and Islamic banks fell short of achieving their targets.

The province-wise agri credit disbursement witnessed double-digit growth across all provinces and regions, however, banks struggled to achieve their assigned regional targets in the underserved provinces/regions. He urged that agri lending banks and institutions to double up their efforts and commitment to ensure achievement of agri credit target in the underserved provinces and regions.

He also urged the federal and provincial governments, revenue departments, farmers’ associations and other stakeholders to contribute in increasing crop productivity by adopting innovative farming techniques, providing modern cold storage and silos facilities, implementation of automated land revenue record and efficient irrigation systems to facilitate banks in their endeavor to adopt agri finance as a viable business.

Bajwa also highlighted that besides providing an enabling regulatory environment, the SBP has been taking various developmental initiatives to boost agri financing at the grass root level. These included holding a number of awareness sessions all over the country and job fairs in collaboration with agricultural universities in the underserved provinces/regions.

The governor emphasised that all banks should finalise the recruitment of the shortlisted candidates on a priority basis and to take maximum benefit from the upcoming job fairs being planned by SBP in collaboration with these universities.

While assigning the agri credit target for FY 2018-19, it was shared that the overall disbursement target of Rs1,250 billion has been assigned to banks which is 82 per cent of the total estimated credit requirement of Rs1,519 billion. The province and sector-wise distribution of the target was adopted while considering the provincial agricultural credit requirements, banks’ overall lending capacity and their business expansion plans.

It was highlighted that for the first time, Islamic banks and Islamic branches of commercial banks have been assigned disbursement target of Rs100 billion to help realise its potential. Furthermore, the overall target of outstanding borrowers has been enhanced Rs4.42 million with the addition of 700,000 new borrowers.

The committee also deliberated on the new directions in agricultural financing by focusing on digitalisation of agricultural loan processes, value chain and warehouse receipt financing, high value-added crops, and provision of farmer advisory services and real-time crop monitoring through Geographic Information Systems (GIS).

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