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ISLAMABAD: Pakistan Banks’ Association (PBA) is planning to establish “SME and Agriculture Index” to target the customers currently outside the documented economy.

Pakistan Banks’ Association held an online meeting with the Federal Minister for Finance & Revenue Muhammad Aurangzeb.

The meeting focused on enhancing support by the banks for the three key sectors of Agriculture, Small and Medium Enterprises (SMEs), and Digital & Technology in Pakistan. The discussion underlined the banking sector’s commitment to fostering financial inclusion in the Country.

Aurangzeb holds key meeting with SBP governor

Federal Minister mentioned at the outset that the idea of this exercise shall be to encourage the entire sector to contribute towards these priority sectors as per their size and unique offerings & strengths.

While there will be no “directed lending”; however, there shall be voluntary targets to be set between the banks and the regulator to share the responsibility to contribute towards these critical sectors. He expects the banks to step up and continue to work with the Government in the revival and the growth of the economy.

During the session, Chairman PBA Zafar Masud along with the Steering Committee members on these initiatives including Vice Chairman PBA Ahmed Bozai, CEO & SG PBA Muneer Kamal, Executive Director (Financial Inclusion Group) State Bank of Pakistan (SBP) Syed Irfan Ali, and President & CEO Meezan Bank Irfan Siddiqui presented a comprehensive set of recommendations aimed at promoting growth and sustainability in these vital sectors.

The proposals were developed in close consultation with SBP to ensure they effectively address the unique challenges and highlight the opportunities within each sector.

The key recommendations in the agriculture sector included, among other steps, restructuring crop loan insurance schemes to integrate crop yield factors, revitalising agricultural cooperative banks and upgrading provincial agricultural cooperative legislations to facilitate the creation of agricultural cooperative lending institutions.

The recommendations also included exploring technology-driven solutions to facilitate the distribution of targeted subsidies through banks, particularly to the subsistence-level farmers, similar to BISP, to promote much-needed financial inclusion.

Similarly, it was resolved in the meeting that banks get actively involved in providing financial and management support to entities such as the Small and Medium Enterprises Development Authority (SMEDA) and National Credit Guarantee Company Limited (NCGCL).

The Minister was apprised that PBA and SBP are actively engaged in revising SME Prudential Regulations, enhancing clean financing limits, and reviewing regulatory retail portfolio limits to facilitate SME financing.

The Minister was informed that PBA is contemplating to establish “SME and Agriculture Index” to target the customers currently outside the documented economy while also enhancing credit risk management.

On the Digital & Technology front, PBA recommended facilitating retail foreign investment through digital micro Sukuks/infra bonds and integrating freelancers into payment gateways.

It was also proposed to enhance foreign remittance flows via specially developed online portals for overseas Pakistanis. It was emphasised that the banks be allowed to offer products and services in technology space, currently only used for their own operations, to the outside world to harness export flows.

The recommendations related to documentation of the economy through the use of technology were also discussed, and outlined the role that the banks will play in furthering Government’s efforts in this respect.

The Minister commended PBA’s Steering Committee, and the respective Task Forces for the three identified priority sector, for their thorough analysis and valuable recommendations. He highlighted the crucial role of the banking community in driving economic growth. He stressed upon the banks to enhance their efforts in supporting these priority sectors to foster economic development and prosperity.

The Minister consented to the governance structure for the implementation of the proposed recommendations by PBA, jointly with SBP and the Ministry of Finance & Revenue, spearheaded by him and the Governor SBP.

“PBA and its members are fully committed to working closely with the Ministry of Finance and the SBP to implement these recommendations and ensuring effective contribution of the banking sector to Pakistan’s economic prosperity,” commented Zafar Masud Chairman PBA at the end of the meeting.

Copyright Business Recorder, 2024

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