KARACHI: State Bank of Pakistan (SBP) has set agriculture credit disbursement target of Rs 500 billion for 2014-15 to facilitate growth in agricultural production.
This was announced in the annual meeting of the Agricultural Credit Advisory Committee (ACAC) at SBP Lahore.
Governor SBP said the government has a keen interest and high commitment to upgrade this vital sector of the economy, which wa essential for achieving the broader national objectives of rapid economic growth and alleviation of poverty.
Agriculture sector is an essential component accounting for around 20 percent of Gross Domestic Products and employs nearly half of the labour force.
The sector directly supports three-quarters of the population and contributes a large share of foreign exchange earnings to the country.
To increase agriculture production and foster its growth, we need to increase productivity through optimum utilisation of resources and use of advanced farming techniques, he added.
The sector has a lot of potential, which can be better tapped by making available the required financial resources as and when needed.
Governor said as per provisional figures, around Rs 389 billion have been disbursed by June 30, 2014 in fiscal 2014, thus surpassing the revised target of Rs 380 billion.
He said SBP has long been making efforts to enhance the flow of credit to agriculture, resultantly, the agricultural disbursements registered steady growth and rose to Rs 333 billion in FY 2012-13 from Rs 169 billion in FY 2006-07 recording an annual growth of over 10 percent. The revised target for 2013-14 was set at Rs 380 billion which was rather challenging for both SBP and banks which was however not only met but superseded.
He expressed, “We, as a banking community, gladly accept it as a challenge and are fully committed to accomplish 2014-15 target”.
He requested the national and provincial government representatives to give their assurance and commitment to provide all kinds of support to the banking industry, especially agriculture lending banks for smooth operations.
The share of banks’ credit to agriculture is around 5.7 percent of their total advances and the total outreach is to just over 2.15 million borrowers as against 8.3 million farm households in the country.
This indicates ample room for enhancement of agriculture portfolio by the banks.
According to estimates, only 35 to 40 percent credit requirement of agricultural sector is being met by the formal banking system while the remaining is fulfilled through non-institutional credit sources.
Finance Minister Ishaque Dar after the meeting encouraged all stakeholders and the banking community for their support to agricultural sector.
Dar said the key to improving agriculture productivity was access to high yielding inputs and markets and most importantly the access to credit whenever it is needed.
Therefore, keeping in view the vital role of agriculture in ensuring food security, reducing poverty, generating economic growth and complementing the industrialisation as most of our industries acquire major input from agriculture sector the government was committed to develop a sustainable and profitable agriculture sector.
It has been decided to establish a National Food Security Council for this purpose. The council will be responsible for ensuring policy coordination across provinces and relating to productivity improvements, market reforms, value addition and prices that ensure stable incomes for farmers.
A package of incentives and support has already been approved by the government for the agriculture sector which include credit guarantee scheme for small and marginalised farmers, enhancement of the scope of CLI premium reimbursement scheme up to 25 acres land holding, livestock insurance scheme for all farmers getting financing for up to 10 cattle, initiating regulatory mechanism for establishment of a warehousing clearing system and receipt financing mechanism and incentives for processing industries of special areas such as Makran Division, Gilgit-Baltistan, Swat District and Federally Administrated Tribal Areas regions. These steps will facilitate the farming community as well as banks to increase financial outreach in the sector.
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