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SBP Governor Tariq Bajwa stresses harnessing technology to boost agri sector

SBP Governor Tariq Bajwa stresses harnessing technology to boost agri sector

KARACHI: State Bank of Pakistan (SBP) Governor Tariq Bajwa has urged all the stakeholders, including banks and federal and provincial governments, to harness technology platforms in a bid enhance agricultural productivity.

He said this while presiding over the mid-term review meeting of Agricultural Credit Advisory Committee (ACAC) held in Hyderabad.

“Organising regular ACAC meetings at various locations displays our commitment towards promoting agricultural financing in all regions, especially the underserved areas,” reaffirmed the governor in his inaugural remarks. “While previous meetings were held in Balochistan and Azad Jammu and Kashmir, we are convening it for the first time in Hyderabad to provide impetus for agricultural financing in the region.”

While reviewing the progress on agricultural credit during July-December 2018, the governor appreciated the efforts of banks in promoting agricultural financing.

He shared that during the first half of FY19, banks disbursed Rs527.3 billion, which was 42.2% of total target assigned for FY19. This figure was 22% higher than the credit disbursed during the same period of the last fiscal year.

The outstanding portfolio of agriculture credit further widened to Rs521 billion at the end of December 2018 from Rs442 billion last year, a growth of 17.9%.

Moreover, the number of outstanding borrowers also rose to 3.9 million at the end of December 2018 from 3.46 million last year, with a growth of 12.8%.

The chair further acknowledged the efforts of microfinance banks and institutions in providing financing to small and marginalised farmers.

“Despite witnessing reasonable progress during FY19, the industry still faces various demand and supply side challenges,” Bajwa pointed out.

In particular, he highlighted the geographical disparities in provision of agriculture credit as the disbursements in Khyber-Paktunkhwa, Balochistan and Gilgit-Baltistan remained far from their respective targets.

Advising the banks to focus specifically on production loans for small farmers, he emphasised enhancing their outreach in terms of agricultural infrastructure by hiring agriculture credit officers.

Moreover, the governor highlighted the efforts of Islamic banks in achieving an 80% growth in disbursement during July-December 2018 compared to the same period of preceding year.

“However, their share in total disbursement still amounts to less than 3% in overall agriculture credit,” he shared.

Bajwa was of the view that banks should adopt a highly focused approach especially towards the underserved areas to achieve the Rs1,250 billion agriculture credit target for FY19 while bringing a qualitative shift in agriculture financing. SBP expects slowdown in economic growth to 4-4.5%

He also urged Islamic banks and Islamic windows of commercial banks to play an active role in expanding outreach in potential areas particularly to faith sensitive farming community.

The remarks of the governor were followed by a detailed presentation wherein the performance of banks on agriculture financing during the first half of FY 2018-19 was reviewed against their targets and potential areas of concerns were also highlighted.