There is a need to address the quality of agricultural credit, its geographical imbalances and uneven distribution among different categories of borrowers, said State Bank of Pakistan (SBP) Governor Dr Reza Baqir.
Chairing the annual meeting of the Agricultural Credit Advisory Committee (ACAC) on Monday, he lauded the performance of commercial banks for the unprecedented level of agricultural credit disbursement at Rs1.4 trillion in FY21.
“Collective efforts of 50 financial institutions under the ACAC’s guidance helped achieve 91% of the assigned target despite the challenges posed by the Covid-19 pandemic,” he said.
“The leaderships of these banks can now take the journey to the next level of qualitative improvement in agricultural credit in line with the strategic shift and key policy actions taken by the SBP.”
The governor elaborated that the agricultural credit target was fixed at Rs1.7 trillion with 5 million borrowers.
Baqir announced two new measures to help boost agricultural financing. The first scheme is a comprehensive scoring model to rank banks according to the key agricultural credit indicators and targets.
This will foster a competitive environment because well-performing banks would be recognised whereas underperforming financial institutions will be encouraged to focus on areas where improvement is needed.
The second scheme designates a bank, volunteering to serve as a champion/ lead bank, in an underserved province/ area.
“Additional steps in this regard include establishment of help desks in such areas to facilitate farmers and launch targeted and collaborative awareness drives for extensive outreach,” the governor said.
Baqir concluded that the SBP’s vision would serve twin purposes, ie enhancing farmers’ financial inclusion and enhancing lending opportunities for banks.
He highlighted that Multan had immense agricultural potential and there was a wide scope to expand agricultural finance in the city.
The meeting was followed by a presentation on the performance of banks with regard to agricultural financing.
ACAC deliberated on the new directions in agricultural financing, particularly climate-smart practices and the role that financial institutions could play.
Moreover, the committee also discussed ways to enhance the efficiency of existing agricultural credit infrastructure across the country.
Published in The Express Tribune, December 21st, 2021.