The State Bank of Pakistan (SBP) has directed banks to make sure that their respective targets, along with industry target of agriculture disbursement of Rs. 1 trillion, is achieved in financial year 2017-18.
“I would urge the Presidents and CEOs of all banks to set up agricultural credit committees comprising of all group heads in their institutions and personally head these committees”, said Tariq Bajwa, Governor State Bank of Pakistan while presiding the mid-term review meeting of Agricultural Credit Advisory Committee (ACAC) held in Karachi.
While reviewing the progress on agricultural credit disbursements during July December 2017, the Governor lauded the efforts of banks in promoting agriculture credit.
By disbursing Rs. 432 billion during the first six months of FY 2018, banks have demonstrated that agricultural credit disbursement target of Rs. 1001 billion will be achieved, he said.
Adding further, he said that due to improvement in agricultural credit infrastructure, the disbursement trend has turned positive in the underserved provinces like KPK and Balochistan, however, concerted efforts are required to narrow the regional disparities by further enhancing the agricultural credit infrastructure.
To prioritize agriculture lending, Bajwa advised that internal agricultural credit committees would enhance collaboration and ensure effective monitoring of the agricultural credit within institutions.
He also advised banks to adopt an effective agricultural credit management structure with integrated reporting lines of agricultural credit teams to make agricultural finance a key indicator of banks’ performance.
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Bajwa also took stock of the four key points identified during the last ACAC meeting held on 25th August 2017.
These included:
- Achievement of Rs. 1001 billion disbursement targets.
- Increasing financial inclusion of small farmers to address their credit needs, particularly for production loans.
- Rationalizing the markup rates on agricultural financing to pass on the benefit of historically low discount rate.
- Increasing banks’ footprint in under-served regions and provinces for reducing regional disparities.
The Governor, while appreciating the increase in agricultural credit borrowers of banks by 182,000 mainly due to inclusion of borrowers by the Microfinance Banks, expressed his concern over the attrition of borrowers of five big commercial banks, specialized banks and advised banks to take corrective measures for increasing their number of small borrowers to achieve the overall target of 1 million fresh borrowers during FY 2018.
He also urged Islamic banks to play their due role in the promotion of agricultural finance by strengthening their agricultural credit infrastructure and developing innovative products.
