State Bank launches livestock insurance scheme
It will safeguard interest of farmers in case of death of animals.
The livestock sector contributes 55% to the agriculture economy and 11.4% to the overall gross domestic product (GDP). PHOTO: INP/FILE
KARACHI:
The State Bank of Pakistan, in collaboration with the Securities and Exchange Commission of Pakistan, banks, insurance companies and provincial livestock and dairy departments, has developed a framework for livestock insurance for the borrowers.
“It is aimed at improving access to finance for the livestock and dairy sector by mitigating risk of livestock loss due to disease, natural calamities and accidents,” the SBP said in a press release on Friday.
The livestock sector contributes 55% to the agriculture economy and 11.4% to the overall gross domestic product (GDP). It is an important tool for poverty alleviation and for raising living standards of the poor, especially in rural areas.
However, the SBP said, banks’ financing to livestock, dairy and meat industry was only Rs56 billion, constituting 17% of total agriculture lending of Rs336 billion in 2012-13.
One of the major reasons for the modest credit offtake was limited availability of appropriate insurance products or other risk mitigation tools.
According to the SBP, the livestock insurance scheme will provide an essential risk mitigating tool to encourage banks to enhance flow of credit to this highly potential and underserved sector.
The scheme will safeguard the interest of farmers, who borrow from banks, in case of death due to disease, accident, flood, heavy rains and storm of their buffaloes, cows and bulls.
Under the scheme, banks will obtain insurance of all livestock loans up to Rs5 million for the purchase of animals.
The SBP has asked banks to implement the scheme according to given parameters and enter into agreements with reputable insurance companies for underwriting livestock insurance for their borrowers.
Banks may also negotiate with insurance companies for best terms relating to insurance coverage for disability and theft of animal, premium rate, etc.
The SBP said it would ask the government to bear the cost of insurance premium for small farmers through budgetary support as was done under the government’s mandatory crop loan insurance scheme for five major crops.
The central bank classifies farmers having up to 20 cows or buffaloes and 50 fattening cattle as small farmers.
Published in The Express Tribune, November 2nd, 2013.
The State Bank of Pakistan, in collaboration with the Securities and Exchange Commission of Pakistan, banks, insurance companies and provincial livestock and dairy departments, has developed a framework for livestock insurance for the borrowers.
“It is aimed at improving access to finance for the livestock and dairy sector by mitigating risk of livestock loss due to disease, natural calamities and accidents,” the SBP said in a press release on Friday.
The livestock sector contributes 55% to the agriculture economy and 11.4% to the overall gross domestic product (GDP). It is an important tool for poverty alleviation and for raising living standards of the poor, especially in rural areas.
However, the SBP said, banks’ financing to livestock, dairy and meat industry was only Rs56 billion, constituting 17% of total agriculture lending of Rs336 billion in 2012-13.
One of the major reasons for the modest credit offtake was limited availability of appropriate insurance products or other risk mitigation tools.
According to the SBP, the livestock insurance scheme will provide an essential risk mitigating tool to encourage banks to enhance flow of credit to this highly potential and underserved sector.
The scheme will safeguard the interest of farmers, who borrow from banks, in case of death due to disease, accident, flood, heavy rains and storm of their buffaloes, cows and bulls.
Under the scheme, banks will obtain insurance of all livestock loans up to Rs5 million for the purchase of animals.
The SBP has asked banks to implement the scheme according to given parameters and enter into agreements with reputable insurance companies for underwriting livestock insurance for their borrowers.
Banks may also negotiate with insurance companies for best terms relating to insurance coverage for disability and theft of animal, premium rate, etc.
The SBP said it would ask the government to bear the cost of insurance premium for small farmers through budgetary support as was done under the government’s mandatory crop loan insurance scheme for five major crops.
The central bank classifies farmers having up to 20 cows or buffaloes and 50 fattening cattle as small farmers.
Published in The Express Tribune, November 2nd, 2013.