Governor SBP calls banks for achieving Rs. 1 trillion agri-credit target

590

KARACHI, Aug 26 (APP): The Governor of State Bank of Pakistan
(SBP), Tariq Bajwa, has called banks to address Geographical And
Sectoral Imbalances for achieving Rs one trillion agri-credit target
for fiscal year 2017-18.
A statement here on Saturday said that the Agricultural Credit
Advisory Committee (ACAC) meeting was held in Quetta under the
chairmanship of Governor State Bank of Pakistan (SBP), Tariq Bajwa.
The meeting was attended by senior officers of SBP, presidents
and executives of commercial banks, specialized banks, microfinance
banks and Islamic banks, representatives from federal and provincial
governments, and chamber of agriculture/ farmers associations.
Bajwa, while congratulating the ACAC members on surpassing the
Rs 700 billion targets for the fiscal year 2016-17, stressed upon four
key areas requiring special attention of all stakeholders which
included Strategizing the achievement of Rs. one trillion disbursement
target; Increasing financial inclusion of smallholder 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 and increasing bank’s
footprint in underserved regions and provinces for reducing regional
disparities.
While delivering his keynote address, Bajwa emphasized that in
order to successfully harness untapped potential of agricultural, it
is necessary to meet the credit demand.
He highlighted critical challenges confronted by the industry
including provision of finance to small and marginalized farmers,
addressing geographical and sectoral imbalances and financing to
non-crop activities need to be addressed.
In particular, financial institutions need to come up with new
ideas and products for spreading their outreach to remote and
underserved areas like Balochistan.
Bajwa also stated that there is a huge scope and demand for
Shariah compliant agri. financing products and recommended Islamic
banks to increase their focus on Islamic agri financing.
He highlighted the active role played by the Central Bank for
promoting agri. finance in the country.
Governor shared the SBP’s multifaceted approach to sensitize
banks to adopt agricultural financing as a viable business line.
He informed the audience that due to joint efforts by SBP and the
industry for broadening access to finance in the country, formal
credit disbursement by financial institutions has increased to Rs
704.5 billion in FY 16-17 from Rs 391.4 billion in FY 12-13, showing a
steep increase of more than 80 percent in 4 years.
The key note address was followed by a presentation wherein the
performance of banks on key indicators relevant to agricultural
financing was reviewed.
The participants deliberated on the way forward for credit
enhancement in the underserved provinces/regions especially
Balochistan.
The committee proposed the following key actions:

1. Designate at least 20 percent of total branches as agri. lending
branches, and ensure availability of adequate Agri. Credit Officer in
such outlets.
2. Ensure achievement of agri. credit targets of underserved
province particularly Baluchistan, KPK, AJK and GB.
3. Linking advances with the deposits mobilized from the province to
ensure supply of agri. credit in the underserved provinces.
4. Making agri. finance a key indicator of banks’ performance.
5. Adoption of automated land record management system
6. Adoption of digital financial services and branchless banking
channels to reduce operational cost and rationalize mark-up rates.
7. Capacity building of banks’ officials and farmers awareness in
underserved areas
8. Use of service providers to support farmers in pre and post
harvest activities and to increase access to agri. finance and other
banking services.
While summing up the meeting, Tariq Bajwa shown his confidence on
the bank’s commitment to;

1. Achieve agri. credit target of Rs.1,001 billion for FY 2017-18
2. Increase outreach agriculture borrowers by one million during FY
2017-18
3. Enhance farmer’s productivity through availability of credit,
extension services, farm mechanization, quality seeds & fertilizers,
storage facilities and marketing of agri. produce
In the end, the Governor advised the financial institutions to
treat agriculture financing as strategic part of their overall credit
growth policy and encouraged them to explore new markets, develop
innovative products, promote Islamic agri. financing and create more
linkages for improving livelihoods in the country.
He supported the idea of establishing Bank of Balochistan to
improve financial services in Balochistan.
He thanked the participants and hoped that the financial
institutions will achieve overall annual target for 2017-18 beside
achieving their provincial/regional targets particularly in
underserved areas like Baluchistan, KPK, Gilgit Baltistan and AJK.