The State Bank of Pakistan (SBP) has set the agriculture credit disbursement target of Rs 500 billion for fiscal year 2014-15 to facilitate growth in agricultural production.
This was announced in an annual meeting of the Agricultural Credit Advisory Committee (ACAC) at SBP in Lahore.
Finance Minister Ishaque Dar graced the occasion after the meeting to encourage all stakeholders and the banking community for their support to agricultural sector. Addressing the meeting, the SBP governor said that the finance minister and the government had a keen interest and high commitment to upgrade this vital sector of the economy which was essential for achieving the broader national objectives of rapid economic growth and alleviation of poverty.
Highlighting the role of agriculture in Pakistan, he said agriculture sector was an essential component accounting for around 20 per cent of GDP 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.
The governor said for increasing agriculture production and fostering its growth, they needed to increase productivity through optimum utilization of resources and use of advanced farming techniques.
The sector has a lot of potential which can be better tapped by making available the required financial resources as and when needed.
Referring to SBP’s initiatives for improving access to finance to the farming community, the governor told that as per provisional figures, around Rs 389 billion had been disbursed by the end of FY 2013-14 (by 30th June 2014), thus surpassing the revised target of Rs 380 billion.
Wathra said the SBP had 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 per cent.
The revised target for 2013-14 was set at Rs 380 billion which was rather challenging for both the SBP and banks which was, however, not only met but superseded.
Referring to the indicative target for 2014-15 of Rs 500 billion assigned by the government, he said: “We, as a banking community, gladly accept it as a challenge and are fully committed to accomplish this ambitious target.”
He further elaborated that while the SBP had developed a strategy to achieve this target, this would require high level of commitment from banks’ Board of Directors and their top management.
The governor 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.
He also urged upon banks that this was a high time to play a meaningful role in the achievement of national goals of growth and development by channelling adequate financial resources to the agriculture sector.
The SBP governor also pointed out that the share of banks’ credit to agriculture was around 5.7 per cent of their total advances and the total outreach was 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. Further, 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.
