Lahore, In the annual meeting of the Agricultural Credit Advisory Committee (ACAC) held on December 14, 2023, the Governor of the State Bank of Pakistan (SBP), Mr. Jameel Ahmad, emphasized the critical need for banks to enhance their services to the agriculture sector. He highlighted this sector’s importance for Pakistan’s socioeconomic development and urged banks to provide farmers with easier and more efficient access to financial services.
According to State Bank of Pakistan, the Governor praised the significant achievements in agriculture credit disbursements, which reached Rs1,776 billion during FY23, marking a 25.2% year-on-year growth. Despite challenges such as floods, the sector nearly achieved its target, demonstrating resilience and adaptability.
Governor Ahmad expressed optimism for a strong recovery in agriculture, projecting a real GDP growth of 2 – 3% in FY24. He announced an ambitious disbursement target of Rs2,250 billion for FY24, 26.7% higher than the previous year’s disbursement. He urged banks to not only meet but exceed this target, highlighting the 30% growth achieved during July-Oct 23 as an encouraging sign.
The Governor addressed challenges, including borrower attrition, and informed that the SBP would work individually with banks to develop strategies for a sustainable increase in agriculture borrowers. He encouraged banks to build their agrifinance capacity and partner with Microfinance Institutions (MFIs) to extend their reach.
He stressed the importance of improving farmer productivity to make them more viable for banks. Collaboration with AgriTechs, agricultural universities, and provincial agricultural departments was advised for enhancing farming techniques and agritech usage.
The Governor also highlighted the need to assist small farmers in selling their produce at competitive prices, suggesting banks could connect them with reputable buyers. He called for a focus on developmental loans, particularly for mechanizing the agriculture sector, and exploring financing options for agri-service providers offering machinery and equipment rentals to farmers.
Acknowledging Pakistan’s vulnerability to climate change, Governor Ahmad highlighted SBP’s green initiatives and called for proactive banking industry involvement in addressing climate risks through various tools and international collaborations.
He envisioned a fully automated agricultural financing ecosystem, emphasizing the transformative impact of digital solutions, particularly in agricultural lending. He urged banks to integrate with the Punjab Land Records Authority’s Land Record Management Information System (PLRA’s LRMIS) for agricultural loan processing by June 2024 and encouraged other provinces to digitize their land records for seamless integration.
The ACAC meeting, a longstanding tradition of the SBP since the 1970s, saw participation from senior officials across federal and provincial governments, bank CEOs, agricultural chamber members, farming community representatives, and SBP officials.