ISLAMABAD, April 11: Financial sector comprising ADBP, banking institutions and leasing companies is working out an effective mechanism to provide insurance cover to the agriculture sector, mainstay of the country’s economy.
“Formal deliberations among the financial sector institutions will be held at the conference to be held next month as major initiative to propel the contribution of agriculture sector to the economy”, said Chairman, Agriculture Development Bank of Pakistan, Istaqbal Mehdi in an interview with APP here on Thursday.
The conference, being organized by the ADBP will devise the modalities of the regime to arrange insurance facilities for the crops, agriculture implements and borrowers’ life, added the chairman.
Agriculture, exposed to weather vagaries and other risks, direly required insurance cover to beef up its contribution towards exports, import substitutions and cutting import bill, thus realizing the objective of economic self-reliance, observed Mehdi.
Answering a question, he said the financial institutions were earlier no doubt reluctant towards providing insurance cover to the agriculture sector owing to severe oscillations and risks, however it was one of the major priorities of the government to strengthen the sinews of agri sector — linchpin of the economy through insurance cover.
For this purpose, he expressed the confidence that the agriculture sector, under insurance umbrella will augment its share to the economic development.
In response to another question about price stability of agri-produce, the chairman said another institution was being set up under the sponsorship of the ADBP to ensure good price to the growers on sustainable basis, eliminating the role of the informal sector like middle-man (arhtis), which is exploiting the farming community.
The institution will be established under the new concept of future markets, introduced by ADBP in order to check price volatility, he said adding, it will be regulated by the Securities and Exchange Commission of Pakistan.
Asked about the transparency in the provision of credit to the farmers, Mehdi said a Complaint and Investigation Cell was set up to monitor the credit affairs of the bank in 49 regions.
The system is working effectively and those found involved in malpractices regarding extension of credit to the farming community were removed from the key positions.
He further said private sector was also being involved in the procurement of agri-produce on reasonable prices to protect the interests of the growers.
There is visible departure from the past practice regarding loan provision, he expressed adding, upper limit of the agri credit is now Rs1 million while average loan being given is around Rs55,000 to small farmers which did not exceed Rs200,000 so far.
The decisions of the bank are participative and consensus-backed by the board, Istaqbal Mehdi said continuing, restructuring of the institution will be accomplished by December 2002.
The international Financial Institutions and donor agencies like the World Bank and Asian Development Bank, he said, were also indicating their assistance to the bank in view of its performance and the World Bank agreed to provide technical assistance in the restructuring process of the institution.
An amount of Rs20 billion credit was disbursed among the lower income farmers in the first nine months against the target of Rs32 billion credit provision to purchase inputs including seeds, pesticides and fertilizers during the entire fiscal.
Besides an action plan was also evolved with Rs4 billion to provide credit to the non-conventional crops like tea and edible oil which will help trim the import bill.
There is an increase of about 10 per cent in the new borrowers in this fiscal and about 7,500 tractors were provided besides installing 7,000 tubewells in this period, he expressed.
The bank is working on two-pronged strategy under which restructuring process is proceeding at fast pace side by side adjustment of existing operations in accordance with the needs of the agri sector.—APP