Agri credit disbursement: SBP sets Rs1.7trn target

KARACHI: The State Bank of Pakistan (SBP) Monday set Rs1.7 trillion agriculture credit disbursement target for this fiscal year (FY22).

State Bank Governor Dr Reza Baqir has appreciated banks for providing agri credit of over Rs1.3 trillion during FY21 and set target of Rs1.7 trillion for FY22. According to the SBP, Dr Baqir chaired the annual meeting of the Agricultural Credit Advisory Committee (ACAC) in Multan.

He lauded banks’ performance in achieving the unprecedented level of agri credit disbursement of Rs1.4 trillion in FY21. He appreciated the fact that despite Covid-19 pandemic challenges, collective efforts of 50 financial institutions under the ACAC guidance helped achieve 91 percent of assigned target.

In his inaugural speech, Baqir emphasized that banks’ leadership can now take this journey to the next level of qualitative improvement in agri credit in line with the strategic shift and key policy actions taken by the SBP.

Announcing current year’s agriculture credit target of Rs1.7 trillion with 5 million borrowers, the governor marked the insistent need to address quality of credit, its geographical imbalances and uneven distribution amongst different categories of borrowers.

Banks achieve 64pc target of agri-credit

On this occasion, the governor announced two new measures to help boost agriculture financing. First, a comprehensive scoring model to rank banks according to key agriculture credit indicators and targets.

To foster a competitive environment, the banks performing well will duly be recognized whereas underperforming banks will be strongly encouraged to focus on metrics where improvement is needed.

The second measure designates a bank volunteering to serve as a champion/lead bank in an underserved province/area. Further steps in this regard include establishing helpdesks in underserved areas to facilitate farmers, and launching targeted and collaborative awareness drives for an extensive outreach.

He concluded that the SBP’s vision will serve two-fold purposes; enhancing farmers financial inclusion while providing more lending opportunities to the banks.

Upon convening the ACAC meeting in Multan, the governor, especially highlighted the immense agricultural potential of the area and the opportunities in expanding agriculture finance. This was followed by a presentation on the performance of banks in agricultural financing.

The ACAC deliberated on the new directions in agricultural financing, particularly the climate smart agriculture practices and the role those financial institutions can play. Moreover, the committee also discussed avenues to enhance efficiency of existing agriculture credit infrastructure across the country.

In the second session of ACAC, new and innovative ideas were presented by selected banks and other stakeholders in the area of i) value chain solutions, ii) electronic warehouse receipt financing, iii) digital loan origination system and iv) horticulture value chain financing. The ACAC, while approving the new ideas, set targets for scaling up pilot projects.

The ACAC meeting was attended by senior officials of federal & provincial governments, Presidents/CEOs of banks, members of provincial chambers of agriculture, progressive farmers, representatives of regional farming communities and SBP senior officials.

Copyright Business Recorder, 2021