Dr Ishrat Husain, Governor State Bank of Pakistan, has said that if banks do not operate agriculture credit in accordance with the instructions of the SBP, leasing companies would be asked to come forward and take up the task.
The governor, who arrived here on Monday, held meetings with the representatives of farming community and commercial banks to review the working of commercial banks with particular reference to agriculture credit operations in the province.
He advised the commercial banks not to refuse loans to growers on flimsy ground and, if at all they are refusing loans to anyone, they should give sound reasons of refusal.
He directed all banks that they must display procedure of loans indicating their requirements for granting loans and time frame at a prominent place in the bank so that borrowers could know before hand the requirements of the banks.
He said that banks should not ask for more than what they had notified and displayed at the bank and copies of their displayed requirements should be communicated to Agriculture Credit Advisory Committees, growers'' organisations and the State Bank.
The bankers in principle agreed to a proposal by Qamar Zaman Shah, President of Chamber of Agriculture, that the growers'' credit limit should be set by banks for revolving credit (running finance), and the growers may be allowed to draw any amount of money within that limit and repay instead of the past practice that grower/borrower is not entitled to get fresh loan unless he clears all the past amount.
All banks have agreed to establish the limit, except ZTBP.
The chamber also drew the attention of the Governor that the relief announced by the Prime Minister and Sindh Chief Minister to the loanees of calamity affected areas has not been followed by a notification nor has been quantified. He said that the matter has already been taken up and it has been suggested that the State Bank should be consulted before announcing any such relief.
Dr Ishrat also directed the Agriculture Advisory Committees of lower and upper Sindh to visit all district headquarters and hold meetings with stakeholders and bank representatives to ensure timely and smooth flow of financial back-up to agriculture sector.
He expressed satisfaction over the working of commercial banks, except ZTBP, which is not working up to the expectations of State Bank and the growers.
Later, addressing the members of Hyderabad Chamber of Commerce and Industry, Dr Ishrat said the government is encouraging private banking system in the country and healthy competition is in progress.
He said that the industrial sector should take the advantage of this competition without any fear, "and if you are not satisfied with the terms and conditions of one bank you can negotiate with other bank".
He said that abolishing collateral has encouraged small and medium enterprises and now the financial backup is being provided on normal formalities.
Responding to a question he said establishment of Rs 1 million and above will qualify the facilities granted to SME.
He said now everything is available on net, which would save time of entrepreneurs.