Habib Bank Limited and Bank of Punjab have signed agreements with Naymat Collateral Company Limited to promote farm credit under the initiative of the newly developed system called Electronic Warehouse Receipt Financing (EWRF) for Maize Crop.
The launch of EWRF is in line with the efforts of the State Bank of Pakistan (SB to ensure the availability of adequate credit for agriculture purposes. In this regard, SBP has recently increased credit limits for farmers to meet their input requirements. Earlier, SBP set agriculture credit targets for banks to an all-time high of Rs. 1.7 trillion for FY22.
Addressing the audience at the event held in Habibabad, District Kasur, Governor State Bank of Pakistan Dr Reza Baqir said that banks must extend credit to the farmers to their full potential and make it easier to avail financing as the farmers would now be able to offer banks adequate collateral to avail loans.
He added that the system behind the EWRF is a win-win situation for all the three stakeholders including farmers, banks, and the collateral companies as it offers a smooth and reliable process in terms of storage of the produce, receipts creation, and provision of credit.
He pointed out that last year only 59 percent of the credit needs of the farmers were met through banks, which should now increase substantially. He termed the farmers as the key beneficiaries since they could now manage the risks emanating from price fluctuations in a better way. Farmers are often forced to sell their crops at lower prices during the harvesting season due to the unavailability of storage facilities and to meet their pressing cash requirements. With the availability of EWRF, they will now be able to meet their financing needs from banks. EWRF has also created an incentive for establishing modern storage facilities since it will create the demand for such facilities by farmers.
Taskforce Constituted To Promote EWRF
Dr Baqir also apprised that SBP has established a high-level taskforce for EWRF, comprising key stakeholders, to develop synergies and address bottlenecks and challenges in availing EWRF. This taskforce will be responsible to steer the entire action plan, monitoring performance, and providing strategic direction to boost EWRF in the country.
Besides enhanced credit availability, EWRF will help to improve food security by minimizing post-harvest losses due to the unavailability of modern storage spaces. It will also help in better price discovery that will increase farmers’ profitability and guide in better farming decisions.
President & CEO Habib Bank Limited – the pioneer bank in launching EWR based financing in Pakistan, Muhammad Aurangzeb, said that the launch of this initiative has created a great incentive for banks to extend financing to the farmers. It is the right step towards facilitating the farming community and will help in reaping the massive potential in the agricultural sector to contribute towards the growth of the country.
Assuring continued support of the Bank of Punjab (BOP) in facilitating farmers, its President & CEO, Zafar Masud opined that EWRF would not only assist the farmers in their economic well-being but also significantly help avoid post-harvest losses of various crops.
The event was attended by various dignitaries from Federal and Provincial Governments, CEO Naymat Collateral Management Company Ltd., Presidents/CEOs of banks, warehouse operators, and farming community, among others.
