LAHORE: The State Bank of Pakistan (SBP) is ready to provide unlimited loans for warehouse infrastructure projects in rural areas, central bank governor Dr Reza Baqir said on Tuesday.

Speaking at the Launch & Roadshow of Electronic Warehouse Receipt Financing (EWRF) for Maize Crop at Kasur’s district’s Chunian tehsil, the SBP governor said the commercial banks to provide loans for warehouse infrastructure development projects at six per cent markup. The aim is to support and enhance the scope of agri-financing via EWRF for farmers across the country, he added.

Dr Baqir said the central bank’s top priority is to help growers increase their per-acre yields, build and upgrade their social status. “The agriculture sector in Pakistan contributes 40-50pc in our economy (directly and indirectly). Among all growers, 90pc are the small ones out of which only 40pc become able to avail the credit facility.

That is why I have come here to tell the farmers to use the EWR financing facility as this will not only protect their produce but also make you able to get a better price in the market,” he explained.

He said the SBP, in the last fiscal year, had fixed Rs1.5 trillion agri loan target for all banks. However, the banks disbursed Rs1.365tr. This year’s target is Rs1.7tr, he added. The SBP chief requested the investors to come forward and build warehouses in rural areas in a bid to support the farmers.

Earlier he congratulated commercial banks – especially the Bank of Punjab and Habib Bank – on the initiation of EWRF for maize crop and advised them to extend credit to the farmers to full potential and make it easier for them to avail financing.

He said the system designed behind the EWRF is a win-win situation for all the three stakeholders including farmers, banks and the collateral companies as it offers a smooth and reliable process in terms of storage of the produce, receipts creation and provision of credit. He pointed out that last year only 59pc of the credit needs of the farmers were met through banks, which must now increase substantially.

On the occasion, heads of all commercial banks signed the system usage agreement with a private collateral management company that has digitised all of the accredited warehouses to enable farmers to keep their produce there, get EWRs and then apply and receive loans equaling to 70pc of the total production value from any bank within a couple of days. The core objective of the EWRF is not only to provide loans to the farmers but also to hold and protect their produce for a better price in the market.

Moreover, the facility also enables farmers to have a minimum loss of produce since 15-20pc of the total agri production (rice, maize, wheat, etc) goes to waste due to the non-availability of well-maintained warehouses in the rural areas. Lack of warehouses also forces the growers to sell their produce at cheaper rates to the commission agents, middlemen etc.

Senior SBP officials, presidents and CEOs of all commercial banks, senior Punjab government officers, businesspersons, farmers and notables of the area also attended the EWRF launch ceremony.

Published in Dawn, February 23rd, 2022