Access to loans: Red tape, lack of awareness bedevil small farmers

Most funds go to mills and big farmers, leaving little for small ones.


Our Correspondent September 01, 2012

HYDERABAD: Experts and bankers have identified red tape and lack of awareness as major impediments that have kept small farmers away from credit facilities provided by banks.

Shortage of agriculture finance officers in banks and landlessness to an extent were the other hurdles that were highlighted at a seminar organised by Larh Humanitarian Development Programme here on Thursday.

The speakers were unanimous in their view that the farmers should be rescued from the influence of middlemen and informal lenders, who charge as much as 100% in annual interest.

“A farmer is required (for obtaining a loan) to produce evidence of land ownership and its evaluation (passbook), but the problem starts here,” said Noor Ahmed Nizamani, President of Sindh Agriculture Forum. However, because of unorganised land record, only a small number of farmers did possess passbooks, Nizamani said.

World Bank’s Zahid Hussain Jalbani pointed out that the age-old system of passbooks had been replaced by electronic passbooks in other places.

Soneri Bank Regional Manager Ghulam Mustafa Panhwar agreed that this was one of the key factors behind slow growth of agriculture financing. “We have suggested to the State Bank to make it mandatory to complete the process of issuing passbooks within a week,” he said.

“The SBP allows lending up to 80% of the value of land. A big landlord with land worth Rs100 million can get up to Rs80 million in loans, but a small farmer can’t get more than Rs500,000,” he elaborated.

Published in The Express Tribune, September 1st, 2012.

 

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