Governor State Bank of Pakistan (SBP) Dr. Reza Baqir has appreciated the banks for their efforts in increasing the credit to the agriculture sector, which reached its historical high by the end of FY19.
He said this while chairing the annual meeting of the Agricultural Credit Advisory Committee (ACAC) held in Peshawar, KPK as part of SBP’s efforts to enhance agriculture credit in the underserved provinces and regions.
“For the first time in Pakistan’s history, credit to the agriculture sector has surpassed one trillion rupees,” said the Governor in his keynote address.
Baqir, however, urged the banks to enhance their efforts to achieve qualitative aspects of the assigned targets as well, in line with the strategic shift and key policy actions taken by SBP for agricultural financing.
He highlighted that most of the banks met their assigned targets except for some of the banks including ZTBL, PPCBL, domestic private banks, and Islamic banks.
Province wise agriculture credit disbursement witnessed double-digit growth across all regions, however, banks struggled to achieve their assigned targets in the underserved regions. He urged agriculture lending banks and institutions to scale up their efforts and commitment to ensure the achievement of agriculture credit targets in the underserved provinces and regions.
The governor apprised the committee that SBP is considering three policy actions to promote financial inclusion in the agriculture sector.
- 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.
- Introducing a comprehensive scoring model for ranking of banks on key agriculture credit indicators and targets.
- Introducing incentives and penalties based on performance scores of the banks. Dr. Baqir emphasized that there is a large scope for lending opportunities for banks that support both financial inclusion and banks’ profitability.
The keynote address was followed by a presentation where the banks’ performance on agricultural financing was reviewed against their targets during FY19.
While assigning the agriculture credit target for FY20, the governor shared that an overall disbursement target of Rs. 1,350 billion has been assigned to banks which is 89% of the total estimated agriculture credit requirement of Rs. 1,518 billion.
Province wise and sector-wise distribution of the target will be 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 a disbursement target of Rs.110 billion in line with the previous year to help realize the potential of Islamic agriculture financing.
The overall target of outstanding borrowers has been enhanced to 4.67 million with the addition of 650,000 new borrowers.