KARACHI: The State Bank of Pakistan (SBP) has set an agricultural credit disbursement target of Rs2.250 trillion for the fiscal year 2024 (FY24), encouraging banks to enhance their support to the agriculture sector.
At the annual meeting of the Agricultural Credit Advisory Committee (ACAC) in Lahore, SBP Governor Jameel Ahmad said that despite challenges, such as floods, agricultural credit disbursements reached an impressive Rs1.776 trillion during FY23, marking a remarkable year-on-year growth of 25 percent, achieving 98 percent of the overall target of Rs1.819 trillion.
For FY24, the agricultural credit disbursement target has been set at Rs2.250 trillion for banks, specialized banks, microfinance banks, and microfinance institutions, showcasing the sector’s resilience and adaptability.
The governor expressed optimism about the agriculture sector’s strong recovery, projecting a real GDP growth in the range of 2-3 percent for FY24. He stated, “The disbursement target for FY24 of Rs 2.250 trillion is 27 percent higher than the disbursement made last year, and the stellar growth of 30 percent during July-Oct 23 gives optimism that we are on track to comfortably achieve the disbursement target.”
He called on banks to intensify their efforts not only to meet but also to surpass the target. The governor stressed the need to strengthen and promote growth in the agriculture sector, which plays a pivotal role in the socioeconomic development of the country.
Jameel Ahmad urged banks to ensure easy, timely, and hassle-free access for farmers to financial services, including credit, deposits, and payments. He acknowledged challenges, particularly the attrition of borrowers, and announced that SBP would engage with each bank individually to develop plans and strategies for sustainable growth in agricultural borrowers.
The governor advised banks to collaborate with Microfinance Institutions (MFIs) to expand the outreach of agricultural and rural finance services. He stressed the importance of improving farmers’ productivity by partnering with agri techs, agricultural universities, provincial agricultural departments, and other agricultural stakeholders.
Jameel Ahmad highlighted the promotion of developmental loans for the mechanization of the agriculture sector as a significant area requiring attention. He also suggested that banks explore the feasibility of financing agri-service providers offering agricultural machinery and equipment to farmers on a rental basis.
In recognition of Pakistan’s vulnerability to climate change, the governor mentioned SBP’s green initiatives, including the Environmental & Social Risk Management Implementation Manual, Financing Scheme for Renewable Energy, and Green Banking Guidelines. He called on the banking industry to proactively address climate change through risk mitigation tools, insurance schemes, and collaboration with international donor agencies.
He called for use of digital solutions in streamlining and enhancing the efficiency of processes, especially in agricultural lending. He encouraged all banks to fully embrace the Punjab Land Records Authority’s Land Record Management Information System (PLRA’s LRMIS) for processing agricultural loans by the end of June 2024.
He also urged other provinces/regions to expedite the digitization of their land records for integration with banks to facilitate swift loan processing.
The ACAC meeting, a longstanding annual event of SBP, was attended by senior officials from federal and provincial governments, presidents/CEOs of banks, members of provincial chambers of agriculture, representatives of regional farming communities, and senior officials of the SBP. -PR
