In a significant stride towards bolstering Pakistan’s agricultural backbone, credit disbursements in the agricultural sector witnessed a remarkable 25.2% year-on-year growth during FY23. The State Bank of Pakistan (SBP) Governor, Jameel Ahmad, lauded this achievement at the annual meeting of the Agricultural Credit Advisory Committee (ACAC) in Lahore, emphasizing the pivotal role of the banking sector in fostering socioeconomic development.
The Impressive Numbers: A Testament to Resilience
1. Robust Growth Despite Challenges
Despite facing challenges, including natural disasters like floods, agriculture credit disbursements soared to Rs1,776 billion during FY23. This not only marked a substantial YoY growth but also achieved 97.6% of the ambitious target set at Rs1,819 billion.
2. Optimism Amidst Challenges
Governor Jameel Ahmad commended the collective efforts of banks, microfinance institutions, and specialized banks, showcasing the sector’s strength and adaptability in overcoming adversities. He expressed optimism about a strong recovery in the agriculture sector, projecting a real GDP growth of 2 – 3% in FY24.
Forward Momentum: Setting Higher Targets
3. Ambitious Targets for FY24
Looking ahead, the SBP set an ambitious disbursement target of Rs2,250 billion for FY24, indicating a substantial increase of 26.7% from the previous year. The growth momentum witnessed during July-Oct 23 provides confidence in comfortably achieving this target.
4. Call for Surpassing Targets
Governor Ahmad urged banks to not merely meet but surpass the set target. Acknowledging challenges such as borrower attrition, he assured individual engagement with banks to develop sustainable plans for continuous growth in agriculture borrowers.
Strategic Imperatives: Beyond Financial Inclusion
5. Strengthening Agrifinance Capacity
Governor Ahmad advised banks to enhance their agrifinance capacity and explore partnerships with Microfinance Institutions (MFIs) to widen the reach of agriculture and rural finance services.
6. Enhancing Farmer Productivity
Recognizing the need to improve farmers’ productivity, the governor urged collaboration with agri-techs, agricultural universities, and provincial agricultural departments. This includes providing quality inputs, adopting better farming techniques, and leveraging agri-tech advancements.
7. Facilitating Small Farmers
Governor Ahmad emphasized the importance of facilitating small farmers in selling their produce at competitive prices. Banks can play a pivotal role in connecting them with reputable buyers, fostering a more equitable agricultural ecosystem.
Addressing Challenges: Climate Change and Digital Transformation
8. Climate Change Mitigation
Acknowledging Pakistan’s vulnerability to climate change, Governor Ahmad highlighted SBP’s green initiatives. He urged banks to proactively address climate change through risk mitigation tools, insurance schemes, and collaboration with international donor agencies.
9. Digital Transformation for Efficiency
Envisioning an end-to-end automated agricultural financing ecosystem, Governor Ahmad underscored the transformative power of digital solutions. Embracing digitalization, especially through the Punjab Land Records Authority’s Land Record Management Information System (PLRA’s LRMIS), is essential for swift loan processing.