SBP for giving agri-financing

State Bank of Pakistan (SBP) Governor Jameel Ahmad has urged banks to prioritise agricultural finance as a core and viable business line as the sector faces persistent challenges like low productivity, climate change impact and limited financial inclusion.

Speaking at the Agricultural Credit Advisory Committee meeting, convened by the SBP in Multan on Friday, Ahmad underscored the vital role of agriculture in Pakistan's economy and its contribution to food security, rural livelihoods and integration with industrial and services sectors.

The governor noted that the agriculture sector achieved remarkable growth during FY24. In 1QFY25, however, agricultural growth slowed down to 1.2% from 8.1% last year, resulting in a relatively slower gross domestic product (GDP) growth of 0.9% against 2.3% in 1QFY24.

There are signs of a modest wheat crop, which highlights the need for resilience and innovation in agriculture for sustained growth.

During FY24, due to collaborative efforts of the SBP and banks, a record credit disbursement of Rs2,216 billion was made, higher by 25% compared to the previous year. Building on this momentum, the first half of FY25 recorded disbursements of Rs1,266 billion whereas the number of borrowers rose modestly to 2.86 million.

To increase the number of small borrowers, particularly in underserved and unserved areas, the central bank governor emphasised that banks should expand their rural presence by designating more branches for agri-lending and deploying additional agricultural credit officers.

He asked banks to fully implement their agricultural credit expansion plans and invest in human resources, infrastructure and digital technologies to better serve farmers.

He also encouraged financial institutions to collaborate with relevant government departments, fintechs, microfinance institutions and agri-tech companies to deliver end-to-end digital loan solutions and advisory services tailoured for small farmers.