ISLAMABAD, Dec 27: The Zarai Tarraqiati Bank, formerly known as Agricultural Development Bank of Pakistan, is reducing its lending rate to “single digit”, says the central bank governor.

“The lending rate of Zarai Tarraqiati Bank is being brou-ght down to single digit, as the Bank of Punjab has done,” he stated.

Answering a question during his address on “Pakistan’s economy and future prospects” organised by the Society of Pakistan Economists at the Planning Commission, the State Bank Governor Dr Ishrat Hussain said here on Friday that the BoK’s lending rate of 9 per cent was innovative, which needed to be followed by others.

A three-year loan rolling scheme, he pointed out, would set in motion lower interest rates by other banks. “Hopefully, Zarai Bank will be lowering its interest rate shortly,” he said, adding that a final decision will be taken by the bank’s board of directors.

All the banks, he pointed out, had been directed to extend increased credit to agriculture. “The cumulative loans to the agriculture sector were 23 per cent higher than those of last year”.

Responding to a question, the SBP governor regretted that the people did not have certain idea about corporate farming. “This corporate farming will be allowed on state wastelands in all the provinces,” he said.

He dispelled the impression that the government was not encouraging multinationals to go for the corporate farming. He pointed out that the private sector, including the MNCs will be provided an opportunity to do corporate farming across the country.

However, the central bank governor said that the total land meant for corporate farming was less than one per cent of the total cultivable area. “But I believe that by adopting modern farming, the wheat production in the country could be increased as, at present, the national average is 1.3 tonnes per acre,” he said.

He was of the view that the corporate farming was a modest scheme for achieving higher productivity in major crops.

The monetary policy, he told a questionnaire, was offering good results.

“The lending rate has been brought down to single digit in export finance, agriculture finance, micro-credit and Small and Medium Enterprises (SMEs). Then you must notice that the exchange rate is fairly stable while rupee is strong and the dollarisation of economy has dwindled,” Dr Ishrat Hussain said.

“The cost of capital was 14 per cent, which has now been brought down to 9 per cent,” he said, adding that export finance had further been reduced, from 8 per cent to 6.5 per cent. “In fact, this is at par with our neighbours”.