December 16, 2014 – Zaheer Abbasi – BR Report –
The outstanding portfolio of agriculture loan has increased from Rs 257.09 billion to Rs 290.35 billion at end June, 2014 as compared to same period last year. Sources told Business Recorder that a recent meeting of the National Assembly’s Standing Committee on Finance was further informed that in line with the government focus on promoting agriculture, the target of Rs 500 billion has been set for 2014-15 which is 54 percent of the agri credit needs for the FY 2014-15.
Senior official of Finance Ministry, Zarai Taraqiati Bank Limited (ZTBL) and State Bank of Pakistan (SBP) have informed the meeting that access to agriculture financing remain restricted as a total of Rs 391 billion was disbursed by the banks against agriculture credit demand of Rs 790 billion for 2013-14. In terms of outreach, 2.2 million borrowers have been tapped by banks against a total of 8.3 million farm households in the country. The committee has conveyed the officials to inform them about the measures taken to improve credit disbursement between rural and urban areas of Pakistan. The meeting informed that traditionally, financial services of banking system in Pakistan and elsewhere have remained concentrated in urban markets. And to improve equal opportunities in the banking sector, SBP has taken various policy measures and market interventions for broadening access to financial services to both rural and urban areas. To encourage the commercial banks to expand agriculture credit, the regulator has made it mandatory for the banks to open 20 per cent of their new branches in rural areas and promote mobile phone banking through partnerships between financial institutions and telecoms. Additionally, a financial inclusion policy is almost in final stage in this regard.
The SBP in collaboration with banks, federal and provincial governments, farming community and other stakeholders has endeavoured to create an enabling environment for banks to adopt agriculture lending as a viable business line. In this regard a number of policy and regulatory initiatives have been taken to remove the bottlenecks and enhance access to financial services for the farmers, especially smaller ones. The SBP has revised prudential regulations for agriculture financing to encourage prudent lending to farming community and remove regulatory impediments. Moreover, SBP has issued comprehensive instructions to the banks for streamlining agri. lending procedures and documentation and enhance indicative credit limit of agriculture sector.
Agriculture Sectors, Agriculture, Agriculture Product, Exports, Research, Food Security, Agriculture Loans, ZTBL, SBP