The State Bank of Pakistan (SBP) has allocated an annual agriculture credit disbursement target of Rs 1.8 trillion to the financial institutions for agriculture sector for the fiscal year 2023.
The central bank revealed that specific targets have also been set to improve agricultural productivity. For this purpose, Rs.140 billion has been earmarked for wheat production loans, said a press release.
In addition, the bank has also set a target of Rs.45 billion for tractor financing, while Rs.20 billion for financing harvesters, planters, and other farm machinery.
The per acre indicative credit limits for agriculture financing have also been enhanced from Rs. 60,000 to Rs. 100,000 to support the farming community, SBP said, adding that it will allow farmers to deploy quality inputs for better yields.
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The central bank also pointed out that during the fiscal year 2022, the financial institutions managed to disburse Rs.1.41 trillion to the agriculture sector, when compared to Rs. 1.3 trillion which was disbursed during the last fiscal year. Furthermore, the outstanding agriculture credit posted a huge growth of over 10 percent and climbed to Rs. 691 billion by the end of June 2022, according to SBP.
SBP further said that its recent initiatives stimulated this exceptional growth in the agriculture credit portfolio. One of them is the introduction of a comprehensive agriculture credit scoring model. Adopted by the Agricultural Credit Advisory Committee, the model shows individual scores reflective of each bank’s agriculture credit performance against multi-dimensional criteria on the basis of different indicators including regional performance, sectoral disbursement, outstanding amount, outstanding borrowers, etc., the central bank added.
Moreover, SBP acknowledged that growth in agriculture credit disbursement remained passive during the recent past because of numerous challenges including climate change, underutilization of approved limits by borrowers, resource constraints in banks, etc. Likewise, a few banks, mostly the large public sector banks also showed passive performance and struggled hard to achieve their assigned annual targets.
