KARACHI:
The State Bank of Pakistan (SBP) on Friday called on the commercial banks to
concentrate on agriculture financing as farming is not only a viable business
with huge cash flows but it also contributes significantly to the gross
domestic product (GDP) with strong backward and forward linkages, a statement
said. “The SBP has adapted itself into the role of a facilitator and
developmental partner of financial institutions to accelerate the growth of
agriculture finance in the country,” said the central bank’s governor Ashraf
Mahmood Wathra, while addressing the annual meeting of the Agricultural Credit
Advisory Committee (ACAC) in Multan.
Taking
his statement forward, Wathra asserted the financial institutions need to
strengthen their agricultural finance policies, increase dedicated human
resource, simplify lending procedures, rationalise lending rates, and work
diligently for creating mass awareness.
“The
banks must develop other prerequisites for building lending portfolios and
timely provision of credit to farmers and harness untapped potential of agri
credit demand in the country,” he said.
The
SBP’s governor reiterated the central bank’s vision on financial inclusion and
the ongoing efforts for broadening access to finance to the least served
segments of the country.
The
meeting was informed that financial institutions extended Rs301.7 billion worth
of loans to farmer in the first six months (July-December) of the current
fiscal year, which is 43.1 percent of the indicative target of Rs700 billion
for the year. In FY16, banks disbursed agricultural credit of Rs598.3
billion, which is nearly 100 percent of the overall annual target of Rs600
billion and 16 percent higher than the disbursement of Rs515.9 billion last
year.
Giving
their input the ACAC members proposed the need for collaboration of banks and
government departments for promotion of agriculture credit, enhancement of
agriculture credit infrastructure in underserved areas and development of
Shariah-compliant products, and services for meeting the financial requirements
of faith sensitive clients. The ACAC proposed that banks should allocate both
geographical as well as sector wise targets and expand farm credit
infrastructure particularly in the underserved area. According to the
statement, the committee stressed the need for expediting the loan approval
process by delegation of authority at branch/regional level. Besides, the
committee also called for the development of a mechanism for providing
wholesale lending products to microfinance banks and institutions to strengthen
the outreach of small farmers.
Later,
the head of agriculture credit at financial institutions gave a briefing to the
committee about the performance of banks on key indicators relevant to
agricultural financing. The briefing covered important initiatives taken by the
SBP for improving the access of financial services to marginalised farmers,
while the participants deliberated on the way forward for credit enhancement in
the underserved provinces/regions. Wrapping up the session on an upbeat note,
the central bank encouraged the financial institutions to explore new markets,
develop innovative products, increase use of alternative delivery channels,
value chain financing, and create more linkages for improving livelihoods in
the country.
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