SBP enhances limits on financing for crops, orchards

Revised ceilings likely to facilitate farmers in getting adequate loans.

KARACHI: With a view to aligning the cost of production of farmers with inflationary pressures and current market practices, the State Bank of Pakistan (SBP) has enhanced financing limits for major and minor crops, orchards and forestry.

In this regard, the Report on Indicative Credit Limits and List of Eligible Items for Agri Financing had been revised, said the SBP in a statement released on Wednesday.

Under major crops, financing limits per acre for rice, wheat, cotton and sugarcane have been increased to Rs34,000, Rs29,000, Rs39,000 and Rs53,000 respectively compared to existing limits of Rs19,000, Rs16,000, Rs21,000 and Rs30,000 fixed in 2008.



The report provides a yardstick for banks to assess the credit needs of different groups of farmers vis-à-vis their activities. Banks extensively use the credit limit report for reporting financing statistics to the SBP as per the list of eligible items.

The provincial planning departments use the methodology of the report to determine the farm and non-farm sectors’ financing and credit requirements.

The revised report includes parameters for segmentation of borrowers based on landholdings and average requirements of seed, fertilisers and pesticides have also been embedded in the report to facilitate the provincial planning departments in computing financial and credit requirements of provinces for the farm sector.

An exhaustive list of activities and purposes segregated for farm and non-farm sectors has also been attached to the report.

The revised limits for per acre cost of production are indicative and banks can adjust these based on the actual credit requirements of farmers, market conditions and prevailing prices of farm inputs while sanctioning the loan.

The central bank said it revised the report in consultation with the Pakistan Agriculture Research Council, provincial governments including that of AJK, agricultural universities, banks involved in agriculture lending and farmer representatives.

The revised report and enhanced indicative per acre credit limits are expected to facilitate farmers in getting adequate loans for growing their farms and forestry besides facilitating banks and provincial governments in estimating actual credit requirements of the farmers.

Published in The Express Tribune, February 6^th, 2014.

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