‘Changes needed in the way ZTBL operates’: PBF calls for transformation in agri-financing

KARACHI: The government should make efforts for restructuring financing of its agrarian sector, as 90 percent of farm loans are offered for production and only 6-10 percent for agricultural development.

Similarly, generally less than 2 percent of the total credit is distributed among farmers in Khyber Pakhtunkhwa, Balochistan, Azad Jammu and Kashmir and Gilgit-Baltistan, which is a worrying factor.

Being a federal government specialised bank, the Zarai Taraqiati Bank Ltd (ZTBL) should adopt prudent lending practices, stringent accounting controls, innovative banking solutions and austerity measures for a turnaround in the long term as it was envisaged in the 1980s, says Vice President of the Pakistan Businesses Forum (PBF) Ahmad Jawad.

He pointed out that currently ZTBL and other banks have no institutional means at their disposal to gather meaningful data about farms and rural businesses. They are simply not equipped to make informed investment decisions so far as agri-financing is concerned.

With non-existent formal financing in the sector, agricultural transformation is simply not possible. So, the population will continue to face food supply issues. Farmers are at the mercy of ‘arhtis’ and local money lenders who despite their many faults do provide some liquidity to farm operations.

“Give us competitive agri-financing and we will give you growth, as the agriculture sector has the potential to reach 5 percent of the GDP target,” he remarked.

Although it is true that agriculture in the country will improve if the ZTBL plays its original role through new initiatives. However due to nepotism the fiscal position of the organisation is still weak; till date they have failed to increase the number of their borrowers in a substantial manner, said Ahmad Jawad.

The size of the head office may be growing but the field staff isn’t engaging duly with the farming communities, especially in Sindh, Gilgit-Baltistan and Khyber Pakhtunkhwa.

The ZTBL’s work just revolves around giving out loans and showing in its books disbursements and recoveries, which is against the principles of its establishment, he said.

He wondered how could small farmers bear the cost of financing facility with the ongoing rates of KIBOR? “The president of ZTBL must understand that you are not a commercial bank; your role is to serve Pakistan’s agriculture sector. The more you increase your volumes the more you will get profits.”

However, on the imports side Pakistan spends a huge amount of around $2 billion on import of edible oils every year. In order to save precious foreign exchange, it is the duty of ZTBL to introduce concessional loans for farmers to encourage them to sow soybean, canola and sunflower over large areas, but the ZTBL has failed to take such practical steps on the field.

Ahmad Jawad also demanded of the State Bank of Pakistan to direct the ZTBL to start financing agro-based industries, particularly cold atmosphere stores on special interest rates in order to give a push to value addition as well as to support agricultural exports of the country.

He urged Prime Minister Shehbaz Sharif to bring about a transformation in the way the ZTBL operates, for the sake of the farming community. In this regard, the model of the Agriculture Development Bank of China should be studied. He also exhorted the premier to look into the plight of the ZTBL pensioners.

Copyright Business Recorder, 2022