MULTAN-Governor State Bank of Pakistan Mr. Ashraf Mahmood Wathra directed the banks to understand needs of the economy and focus on agricultural financing as it is a viable business activity, having huge cash flows, and significant contribution to GDP with strong backward and forward linkages.
He was addressing the annual meeting of the Agricultural Credit Advisory Committee (ACAC) which was held under his chairmanship in Multan here on Friday. The meeting was attended by senior officers of SBP, presidents and executives from commercial banks, specialised banks, microfinance banks and Islamic banks, representatives of federal and provincial governments, and farmer associations.
While delivering his keynote address, Mr Wathra highlighted the active role played by the Central Bank for promoting agri finance in the country. He emphasized that over the years State Bank of Pakistan has adapted itself into the role of a facilitator and developmental partner of financial institutions to accelerate the growth of agriculture finance in the country.
He further stressed that financial institutions need to strengthen their agricultural finance policies, increase dedicated human resource, simplify lending procedures, rationalize lending rates, work diligently for creating mass awareness, and develop other prerequisites for building lending portfolios and timely provision of credit to farmers and harness untapped potential of agri . credit demand in the country.
While concluding Governor, State Bank of Pakistan, reiterated the SBP’s vision on financial inclusion and the ongoing efforts for broadening access to finance to the least served segments of the country. The financial institutions are encouraged to explore new markets, develop innovative products, increase use of alternative delivery channels, value chain financing , and create more linkages for improving livelihoods in the country. He thanked the participants and hoped that all stakeholders will play their part in development of country.
The keynote address was followed by a briefing wherein the performance of banks on key indicators relevant to agricultural financing was reviewed. The briefing also covered important initiatives taken by SBP to improving the access of financial services to marginalized farmers. The participants deliberated on the way forward for credit enhancement in the underserved provinces/regions. The ACAC members proposed, amongst other things, the need for collaboration of banks and government departments for promotion of agri . credit, enhancement of agri . credit infrastructure in underserved areas and development of Shariah compliant products and services for meeting the financial requirements of faith sensitive clients.
The meeting was informed that during FY 2015-16, banks disbursed agricultural credit of Rs598.3 billion which is nearly 100% of the overall annual target of Rs 600 billion and 16% higher than the disbursement of Rs 515.9 billion made during FY 2014-15. Moreover, for FY 2016-17, during the first six months (July-December, 2016) financial institutions have disbursed Rs 301.7 billion which is 43.1 percent of the indicative target of Rs 700 billion for the year.
The ACAC proposed allocation of geographical and sector wise targets and enhancement of agri . credit infrastructure particularly in underserved area, expediting the loan approval process by delegation of authority at branch/regional level and development/adoption of digital innovations to improve financial services of the small farmers. It also suggested to the banks devising mechanism to provide wholesale lending products to microfinance Banks/Institutions to strengthen outreach of small farmers, development of long term financing facility for the promotion of fruit orchards and creating financial awareness among the masses to make informed choices for improving their livelihood.
Later on, the Governor also chaired a meeting with the senior representatives of the Chambers of Commerce and Industry of Multan, Faisalabad, Sahiwal, Bahawalpur and D G Khan. Speaking on this occasion, he said that the mutual coordination of institutions played key role in uplift of economy. He added that the economy was crumbling in 2008 and tough decisions were made to strengthen it. “Today our GDP growth rate has reached 4.7 per cent and we’ll take it to 7 per cent very soon,” he declared. He was of the opinion that the GDP needed to be risen up to 8 per cent to end unemployment from the country. He hoped that the GDP was likely to become 5.5 per cent in 2017. He noted that about five to six million youth were getting eligible for job applications annually in Pakistan and the country needed 8 per cent GDP growth to offer them all jobs. He said that the decrease in power crisis also helped improve national economy.
He disclosed that the SBP was going to introduce new laws for promoting small industries and house building finance. He stressed upon the banks, industry and other institutions to enhance their mutual cooperation and collaboration for the sake of national development. He said that the joint efforts by the government and Pakistan Army helped greatly to improve the economy. “The Army got the country rid of terrorism and extortion, improved law and order situation which gave boost to the economy. Similarly, the Prime Minister offered all out moral and legal support along with facilities for this purpose,” he added. He said that the increase in petroleum prices in recent past had delivered a severe blow to Pakistani economy but the mutual efforts of government, army and all other concerned institutions brought it back on the right track.
He said that the SMEs and industry faced tough time during the last few years due to power crisis and even many industries got shut but the government extended support for their revival. He said that the SMEs were the biggest customers of the SBP and more initiatives would be adopted for their uplift.
The Governor declared that a Recovery Ordinance was being promulgated with the collaboration of Ministry of Finance which would help tackle the defaulters. Referring to Islamic Banking, he said that the 13 per cent assets of the SBP had been shifted to the Islamic Banking and this proportion would be risen up to 20 per cent by 2020.
The Governor declared that the SBP would offer subsidised loans for 10 to 12 years to those installing 50 megawatt power generation plants or warehouses.