Governor of State Bank of Pakistan (SBP) Jameel Ahmad urged banks to ensure easy, timely and hassle-free access of farmers to all financial services.
In a recent statement from the State Bank of Pakistan (SBP), issued after the annual meeting of the Agricultural Credit Advisory Committee (ACAC) on December 14, 2023, in Lahore, the Governor SBP underscored the imperative to fortify and foster growth in the agriculture sector, emphasizing its pivotal role in the country’s socioeconomic development.
Governor Ahmad commended the resilience of the agriculture sector in the face of challenges such as floods, noting that agricultural credit disbursements soared to an impressive Rs1,776 billion in FY23, exhibiting a remarkable year-on-year growth of 25.2% and achieving 97.6% of the ambitious Rs1,819 billion target.
Expressing optimism, Ahmad projected a robust recovery in the agriculture sector, anticipating a real GDP growth in the range of 2 – 3% for FY24. He assured that the SBP was well-positioned to meet the end-September targets set with the IMF.
Looking ahead, the SBP chief announced a disbursement target of Rs2,250 billion for FY24, marking a substantial 26.7% increase from the previous year. He pointed to the impressive 30% growth during July-Oct 23 as a positive indicator, expressing confidence in meeting the disbursement target comfortably.
Acknowledging challenges, particularly borrower attrition, Governor Ahmad pledged that the SBP would engage with individual banks to formulate plans for a sustainable increase in agricultural borrowers. He encouraged banks to enhance their agri-finance capacity and foster collaborations with Microfinance Institutions (MFIs) to expand the reach of agriculture and rural finance services.
Furthermore, Ahmad urged banks to forge partnerships with AgriTechs, agricultural universities, provincial agricultural departments, and other stakeholders. This collaborative approach aims to enhance farmers’ productivity through the provision of quality inputs, advanced farming techniques, and optimal utilization of agri-tech.
Highlighting another crucial area, the SBP governor stressed the immediate need for the promotion of developmental loans targeted at mechanizing the agriculture sector. This multifaceted strategy underscores the SBP’s commitment to addressing challenges and propelling sustainable growth in the agriculture industry.
Additionally, the Governor of the State Bank of Pakistan (SBP) advised banks to evaluate the viability of financing agri-service providers who offer agricultural machinery and equipment to farmers on a rental basis.
Concluding his remarks, the SBP chief emphasized the crucial importance for all banks to wholeheartedly adopt the Punjab Land Records Authority’s Land Record Management Information System (PLRA’s LRMIS) for the processing of agricultural loans.
He set a deadline of the end of June 2024 for this adoption and urged other provinces/regions to accelerate the digitization of their land records as well. This move towards digitization is seen as a key step in streamlining and modernizing the processes involved in providing agricultural loans, aligning with the broader goal of enhancing efficiency and accessibility in the agricultural finance sector.