SBP praises banks for disbursing Rs1.4 trillion agriculture credit

KARACHI: State Bank of Pakistan (SBP) Governor Dr Reza Baqir on Monday praised the banks for disbursing Rs1.4 trillion as agriculture credit during FY21, a statement said.

Dr Baqir made these remarks while chairing the annual meeting of Agricultural Credit Advisory Committee (ACAC) held in Multan on Monday.

The SBP governor lauded banks’ performance in achieving the unprecedented level of agriculture credit disbursement of Rs1.4 trillion in FY2020/21.

He appreciated the fact that despite Covid-19 pandemic challenges, the collective efforts of 50 financial institutions under the ACAC guidance helped achieve 91 per cent of the assigned target.

In his inaugural speech, he emphasised that the banks’ leadership can now take this journey to the next level of qualitative improvement in agriculture credit, in line with the strategic shift and key policy actions taken by the SBP.

Announcing current year’s agriculture credit target of Rs1.7 trillion with 5 million borrowers, the governor SBP stressed the need to address the quality, geographical imbalances and uneven distribution amongst different categories of borrowers of the credit.

The governor announced a couple of new measures to help boost agriculture financing, with a comprehensive scoring model to rank banks according to key agriculture credit indicators and targets.

To foster a competitive environment, the banks performing well will duly be recognised, whereas underperforming banks will be strongly encouraged to focus on metrics where improvement is needed.

To designate a bank volunteering to serve as a champion/lead bank in an underserved province/area. Further steps in this regard include, establishing helpdesks in underserved areas to facilitate farmers, and launching targeted and collaborative awareness drives for an extensive outreach.

He concluded that the SBP’s vision will serve two-fold purposes; enhancing farmers’ financial inclusion, while providing more lending opportunities to the banks.

Upon convening ACAC meeting in Multan, the governor especially highlighted the immense agricultural potential of the area and the opportunities in expanding agriculture finance.

This was followed by a presentation on the performance of banks in agricultural financing. The ACAC deliberated on new directions in agricultural financing, particularly the climate smart agriculture practices and the role that financial institutions can play.

The Committee also discussed avenues to enhance efficiency of existing agriculture credit infrastructure across the country. In the second session of ACAC, new and innovative ideas were presented by selected banks and other stakeholders in the area of value chain solutions, electronic warehouse receipt financing, digital loan origination system and horticulture value chain financing, the Committee while approving the new ideas, set targets for scaling up pilot projects.

The meeting was attended by senior officials of federal and provincial governments, Presidents/CEOs of banks, members of provincial chambers of agriculture, progressive farmers, representatives of regional farming communities and senior SBP officials.

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