June 29, 2002	Saturday	Rabi-us-Sani 17, 1423

KARACHI, June 28: Proposals are under deliberation to start ‘Revolving Credit Scheme’ for the agriculture sector enabling farmers to seek fresh loans after partial adjustment of the previous loan, said Dr. Ishrat Hussain, Governor State Bank.

Addressing the ADBP’s Financial Sector Conference on Agriculture here on Friday, he said this scheme would give level playing field to the farmers who would then avail time to sell their hoarded crop at appropriate profit rate.

“We have added at least 45 items in credit schemes of agriculture sector such as diesel oil for tubewells,” he said.

He said the agriculture growth rate of the developing countries remains at the level of 4 per cent and Pakistan was one of them.

Referring to commercial banks attitude, he said in the past they were reluctant to give credit to the agriculture sector. But the present management of SBP has extended numerous incentives to the commercial banks and that all the agriculture credit schemes are being supervised on six-monthly basis by the central bank regularly.

“Credits are no more limited to tractors or fertilizers and even all the restrictions on commercials regarding territorial limits have been removed,” he said.

He said commercial banks even could extend loans to ADBP, which had better infrastructure for distribution of credit to the small and medium farmers.

The SBP governor said that the crop procurement was also being handed over to the private sector and they were being given commodity financing facility at the rate of 12 per cent as was provided to the public sector.

He said special attention was also being given to promote fruit & vegetable cropping, fisheries and live stock sector.

The conference was participated by representatives and heads of banks, financial institutions, leasing and insurance sector and farming community.

Speaking at the inauguration of financial conference, Food and Agriculture Minister Khair Mohammad Junejo asked banks and leasing companies to cater to requirements of agriculture sector with innovative approach.

The minister said that all the credit institutions together catered to only 8 per cent of the needy farmers, leaving about 92 per cent of the farming community. This large segment is dependent on informal credit sources, which offer credit facility at an exorbitantly higher interest rates of 40 to 100 per cent, he added.

He pointed out that country has a total of 10 million eligible farmers and only 900,000 get institutional credit.

He said that the credit availability to the agriculture sector was Rs45 billion during the last three to four years against the actual requirement of Rs280 billion.

This indicates the vast potential available for credit institution in the agriculture sector, which contributes to 70 per cent of foreign exchange through export of raw, semi-processed and processed products.

He said agriculture was the vital sector of national economy, which required higher growth to address the issue of rural poverty and overall growth. The minister pointed out that agricultural policy of the present government encompasses areas like food security, increased productivity and commercialization of agriculture with a crosscutting objective of export orientation.

This goal can only be achieved when necessary institutional financial support is available to farmers and other allied partners of agriculture productivity chain, he added.

He said the credit requirements of agriculture had grown significantly and now every farmer needed huge investment ranging from Rs3,000 to Rs20,000 per acre to grow any crop.

Junejo pointed out that agriculture credit has increased from Rs2 billion in 1977-78 to Rs45 billion to the current level.

Earlier, ADBP chairman Istaqbal Mehdi said that more than Rs100 billion were being provided by the informal sector at an exorbitant rates of 60 to 70 per cent.

Providing comparison between agriculture and industry, he said that return on investment in the agriculture sector was higher than the industry.

He said deposits in agriculture sector was estimated at Rs52.39 billion while deposits in the industry at Rs140.—APP