KARACHI: The State Bank of Pakistan (SBP) has estimated that the agriculture sector would require Rs1.52 trillion during the current fiscal year and has assigned banks to lend at least Rs1.25 trillion in FY19.
“The overall disbursement target of Rs1,250 billion has been assigned to banks, which is 82% of the total estimated agri-credit requirement of Rs1,519 billion,” SBP said in a statement on Saturday.
Banks must overcome their infrastructure gaps to achieve the annual agricultural credit target.
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“The target for FY19 is not very steep compared to last year to allow the banks to bring a qualitative shift in agri-financing,” SBP Governor Tariq Bajwa said while chairing the annual meeting of the Agricultural Credit Advisory Committee (ACAC) held in Muzaffarabad, Azad Jammu and Kashmir.
Furthermore, the overall target of outstanding borrowers has been enhanced to 4.42 million with the addition of 700,000 new borrowers during the year. The central bank has set the new credit disbursement target “with a commitment to serving small farmers and underserved areas through innovative agri-financing schemes,” it said.
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It was highlighted that for the first time, Islamic banks and Islamic branches of commercial banks have been assigned disbursement target of Rs100 billion to help realise its potential, it said.
Banks must continue to innovate and provide agri-credit while adopting digital technologies, value chain financing, high value crops and create more linkages for improving livelihoods in the country.
Banks must enhance their advances-to-deposit ratio in all provinces and regions to support the local economies. “Banks must adopt, replicate and scale up the existing pilots on Electronic Land Record Management Information System for efficient and timely provision of credit to small famers.”
While reviewing the progress on agri-credit targets of FY 2017-18, Bajwa appreciated the efforts of commercial banks, microfinance banks and microfinance institutions for nearly achieving the agri targets.
The banks disbursed Rs972.6 billion, which was close to 97% of the assigned target of Rs1,000 billion and 38% higher than FY 2016-17.
In terms of agri-credit demand, banks met 72% of the total agri-credit requirement compared to 57% last year. He added that the outstanding portfolio of agri-credit also increased to Rs469 billion while serving 3.72 million borrowers at the end of June 2018. The agri-lending banks/institutions added 450,000 fresh borrowers during the year.
While delivering his keynote address, Bajwa highlighted that most of the banks met their assigned targets; however, banks including ZTBL, PPCBL, some domestic private banks and Islamic banks fell short of their targets.
Published in The Express Tribune, August 12th, 2018.
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