ISLAMABAD: The Senate’s functional committee on problems of less developed areas at its meeting on Tuesday raised concerns regarding the disproportionate allocation of funds, with major chunk of the agricultural credits being granted to Punjab, which is not considered a less developed region.

The committee, headed by Senator Agha Shazaib Durrani, noted that the skewed distribution of funds neglected the needs of less developed areas, particularly in the tribal regions of Bajaur, South Waziristan and North Waziristan.

The committee received a detailed briefing on the distribution of agricultural credit through various schemes, including credit guarantee initiatives aimed at promoting rural finance for marginalised farmers, especially in the livestock and dairy sectors in less developed areas. The committee also reviewed the role of the banking sector in facilitating small and medium enterprises (SMEs) and corporate businesses in these regions.

While the State Bank governor and the National Bank president presented various plans and schemes aimed at promoting agriculture and aiding farmers, the committee expressed dissatisfaction with the limited role played by the banking sector in advancing agricultural development, particularly in less developed areas.

Skewed distribution of funds neglects less-developed areas of Bajaur and Waziristan, senators note

Senator Durrani pointed out that 90pc of the country was underdeveloped, yet instead of undertaking special initiatives to address this disparity, most funds were being diverted to the province considered much more developed than others.

He also pointed out the absence of concrete measures for awareness regarding the ‘Kissan Package’, which offers financial relief to farmers. He noted that private banks had taken up agricultural financing primarily as a business venture, with little regulatory action from the State Bank to improve the situation.

“It is regrettable that the State Bank has made no significant efforts to promote agriculture or engage with the banking sector on this issue,” he said, adding that international models could serve as a blueprint for Pakistan.

It reviewed the latest figures related to agricultural credit disbursement for the fiscal year 2025.

The senators were informed that agricultural loans worth Rs1,654.8 billion disbursed constituted 64.3 per cent of the 2025 budget. The outstanding agricultural loan portfolio reached Rs933.2bn by February 2025, showing a 15pc growth compared to the previous year.

The number of outstanding agricultural borrowers stood at 2.85 million by the end of February 2025, marking a 4.9pc year-on-year growth.

Details of region-wise distribution of loans from July 2024 to February 2025 showed that Punjab received Rs1,269bn (64.3pc of total disbursements); Sindh: Rs329.9bn (67.7pc); Khyber Pakhtunkhwa: Rs39.8bn (49.6pc); and Balochistan and other regions Rs16.2bn.

The committee also discussed the ‘Kissan Package’, under which Rs2.96bn in interest was waived off for flood-affected farmers. As part of the scheme, 102,663 farmers benefited across various provinces, including Punjab, Sindh, KP and Balochistan.

Senator Durrani called for the adoption of international best practices to address the challenges faced by less developed areas. “There is a pressing need for targeted funding and policies to address the unique challenges faced by underdeveloped regions. The banking sector has a crucial role to play in this effort, but it requires guidance and regulation from the State Bank,” he said.

Seeking greater collaboration between the State Bank, commercial banks, and government authorities to ensure the equitable distribution of agricultural credit, the committee urged both public and private banks to step up their efforts in supporting the agricultural sector, especially in less developed regions.

It requested a detailed report from the State Bank of Pakistan regarding the loans provided to farmers, specifically focusing on less developed areas, and demanded transparency in the allocation of agricultural credit.

Published in Dawn, April 30th, 2025