ISLAMABAD: Micro Finance Institutions (MFIs) have urged the government to give them status of banks, aimed at availability of credit at the same rates which are being offered to commercial banks.
This demand was placed before the Sub-Committee of Special Committee on agriculture products presided over by Dr. Aisha Ghaus Pasha, in the absence of Shandana Gulzar Khan.
The representatives of Micro Finance Institutions, charging over 30 percent interest on loans were of the view that MFIs should be given more incentives so that they can extend loans to small farmers.
The sub-committee was informed that there should be some relaxation for small farmers in payment of loans and to save them from “Artees” i.e., middlemen, who extend expensive loans to them.
Jahanzeb, a representative of one of the MFIs, argued that the industry faced losses due to Covid-19 which need to be accommodated through some kind of subsidy.
Ghanzfar of Mobilink Bank, said that Covid-related customers and institutions have not been provided any kind of meaningful relief so far.
“This has already constrained the ability of the industry to go further. If the financial impact of Covid-19 is not taken care of then growth will be compromised in the coming years,” he added.
The industry has a number of customers and institutions that have been affected due to Covid which can be shared with the concerned organisation.
The Sub-Committee was further informed that climate change is affecting Pakistan and suggested that steps need to be taken in this regard.
MFIs’ representatives argued that the coverage of insurance in crops’ loans is too meagre, and suggested that there should be disaster risk insurance for the agriculture sector.
The representative of Micro Finance Bank said that they have increased their loans to Rs35 billion from just Rs600 million, adding that the purpose of microfinance institutions is to strengthen small farmers and rural economy.
The Sub-Committee was informed that there is a need to open more branches in the rural areas to facilitate small farmers who are not getting short-term loans because of no access to the facility.
Nawab Sher, MNA, said that Micro Finance Institutions are charging 34 per cent interest on loans which is too high, asking that there is a need to review this policy.
The Chairperson of Sub-Committee, Dr. Aisha Ghaus Pasha remarked that big farmers are getting loans at 7 per cent interest whereas small farmers are being provided loans at 34 per cent interest from MFIs, which is not appropriate.
She maintained that the National Assembly panel has to work for the small farmers. She said loans should be used to increase yield and not for construction of houses.
The representative of Akhuwat Islamic Micro Finance stated that its loans have crossed Rs22 billion, with a share of over Rs2 billion of Punjab Government, adding that recovery of loans is 99.9 per cent.
Copyright Business Recorder, 2021