LAHORE: The State Bank of Pakistan (SBP) has assigned the scheduled banks with the task to disburse Rs500-billion agriculture credit during this fiscal year.

A decision to this effect was taken on Saturday at the annual meeting of the Agricultural Credit Advisory Committee (ACAC), presided over by SBP Governor Ashraf Mahmood Wathra at Lahore Banking Services Corporation (BSC) of the central bank.

Heads of agricultural departments of 31 scheduled banks attended the meeting, which was also briefly joined by Finance Minister Ishaq Dar.

Quoting provisional figures, the SBP governor said around Rs389bn had been disbursed by June 30, 2014, thus surpassing the revised target of Rs380bn set for the 2013-14.

Referring to central bank’s initiatives for improving access to finance to the farming community, Wathra said agricultural disbursements grew steadily and rose to Rs333bn in FY2012-13 from Rs169bn in FY2006-07, growing by more than 10 per cent every year.

“We, as a banking community, gladly accept the indicative target for 2014-15 of Rs500bn assigned by the government and are fully committed to accomplish it,” the SBP governor said.

“The SBP has developed a strategy to achieve the target but this will require high level of commitment from banks’ board of directors and their top management,” he said while requesting the federal and provincial governments to support the banking industry, especially agriculture lending banks.

Urging banks to play a meaningful role to achieve national goals of growth and development by channelling adequate financial resources to the agriculture sector, he pointed out that the share of banks’ credit to agriculture has been around 5.7pc of their total advances and the total outreach just over 2.15 million borrowers as against 8.3m farm households in the country.

“This indicates ample room for banks to enhance agriculture portfolio. Further, according to estimates, only 35 to 40pc credit requirement of agricultural sector is being met by the formal banking system while the remaining is fulfilled through non-institutional credit sources.

“Agriculture sector is an essential component accounting for around 20pc of GDP and employs nearly half of the labour force. The sector directly supports three-quarters of the population and contributes a large share of foreign exchange earnings to the country,” said Wathra.

Meanwhile, Dar assured the stakeholders that the federal government would proactively play its role to develop and transform the agriculture sector on sustainable footing.

The government was committed to develop a sustainable and profitable agriculture sector keeping in view the vital role of agriculture in ensuring food security, reducing poverty, generating economic growth and complementing the industrialisation, he said.

It has been decided to establish a national food security council for ensuring policy coordination across provinces related to productivity improvements, market reforms, value addition and prices that ensure stable incomes for farmers.

A package of incentives had already been approved by the government for the agriculture sector which includes credit guarantee scheme for small and marginalised farmers, enhancing the scope of CLI (credit life insurance) premium reimbursement scheme up to 25 acres of land holding, livestock insurance scheme for all farmers getting financing for up to 10 cattle, initiating regulatory mechanism to establish a warehousing clearing system and receipt financing mechanism and incentives for processing industries of special areas like Makran division, Gilgit-Baltistan, Swat district and Fata regions.

Published in Dawn, July 13th, 2014