SBP governor lauds banks for ‘record financing to agri sector’

'It is for the first time in Pakistan’s history that credit to agriculture sector has surpassed Rs1tr'

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KARACHI: State Bank of Pakistan Governor Dr Reza Baqir has appreciated the banks for increasing the credit to the agriculture sector, which reached its historical high by end of FY19.

“It is for the first time in Pakistan’s history that credit to the agriculture sector has surpassed Rs1 trillion,” said the governor while chairing the annual meeting of the Agricultural Credit Advisory Committee (ACAC) in Peshawar.

Dr Baqir, however, urged the banks to enhance their efforts to achieve qualitative aspects of the assigned targets, in line with the strategic shift and key policy actions taken by SBP regarding agricultural financing.

He highlighted that most of the banks met their assigned targets except for some, including Zarai Taraqiati Bank Limited (ZTBL), Punjab Provincial Cooperative Bank Limited PPCBL, few domestic private banks and Islamic banks.

The province-wise agriculture credit disbursement witnessed double-digit growth across all regions; however, the banks struggled to achieve their assigned targets in the underserved regions.

Dr Baqir urged the agriculture lending banks and institutions to scale up their efforts and commitment to ensure achievement of agriculture credit target in the underserved provinces and regions.

The governor apprised the committee that SBP was considering three policy actions to further promote financial inclusion in the agriculture sector.

“First, enhancing transparency through disclosure of bank-wise performance statistics on a monthly basis covering agriculture credit disbursement, geographic distribution, outstanding amount, number of borrowers, and agriculture credit infrastructure.

“Second, introducing a comprehensive scoring model for ranking of banks against key agriculture credit indicators and targets. Third, introducing incentives and penalties based on performance scores of banks.”

Dr Baqir’s address was followed by a presentation wherein the performance of banks on agricultural financing was reviewed against their targets during FY19. While assigning the agriculture credit target for FY20, it was shared that the overall disbursement target of Rs1,350 billion has been assigned to banks which was 89pc of the total estimated agriculture credit requirement of Rs1,518 billion.

The province-wise 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 Islamic banks and Islamic branches of commercial banks have been assigned disbursement target of Rs110 billion in line with the previous year to help realize the potential of Islamic agriculture financing. Further, the overall target of outstanding borrowers has been enhanced to 4.67 million with the addition of 650,000 new borrowers.

In the end, Dr Reza Baqir encouraged all stakeholders to collaborate and enhance formal credit to agriculture. He urged the banks to enhance their efforts to achieve the regional targets assigned for the year.

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