KARACHI, Dec 4: Adviser to the Prime Minister on Finance and Economic Affairs, Shaukat Aziz has said that the Asian Development Bank will provide finances up to $250 million to be extended to the farmers through Agricultural Development Bank as easy loans.

Talking to the bankers at the dinner hosted for him by Pakistan Bankers’ Association here on Tuesday night, Shaukat Aziz said the negotiations between ADB and the government of Pakistan have been successfully completed and the facility would be finally approved in the forthcoming meeting of Board of Directors of ADB on December 22.

He called upon the bankers to change their business priorities according to the changing environment in the country and focus on new business avenues and opportunities, diversification of products, etc. He said that in the declining interest rate regime, it would be difficult for banks to survive by relying on government treasury bills.

Aziz said the agriculture sector, which constitutes 26pc of the Gross Domestic Produce is in dire need of funds. Similarly, small and medium enterprise sector, micro-financing, housing and construction, consumer financing were the key areas which can provide alternative business to the banks, he added.

Shaukat Aziz said the banks have to reduce the intermediatory cost, to ensure financially viable activity as the declining interest rates and high intermediatory cost would erode their margins.

Giving a hint of specialization, he said it was not necessary to do every thing and some may focus on some areas, leaving rest for others. He also suggested to do project financing and go for asset and fund management side, saying there is no shortage of opportunities and products.

The advisor said in the developed world, some well reputed banks outsource processing and the same may be followed by banks in Pakistan to control the liabilities.

Aziz said the reforms in banking sector were going on before the present government and the Pakistan’s banking industry is better than several Latin American countries, while it lags behind from others.

Shaukat Aziz said now there was regulatory framework in place, having strong good bank as central bank and revitalized Securities and Exchange Commission is instrumenting change.

The advisor said the fundamentals of the economy were encouraging, exports were doing well, revenue collection was on or above target and there won’t be “ U” turn.

Shaukat Aziz said the policy to reduce the tax on banks would continue and over the years, it would be brought to 35pc. He said the reforms in the Central Board of Revenue would continue for which a British company and private sector were involved.

He said the efficient and honest CBR officials would be compensated in salaries or perks and they were anxiously waiting for the reforms to take place.

Aziz said the government has allowed the government bodies to keep their funds wherever they liked, following the fixed criteria and strong credit rating. This would help bring more money to the Banks in the absence of the public sector banks which, he added, were in the line for privatization.

About the complications of several agencies overlapping each other, he said the Banks would be dealing with State Bank of Pakistan alone. Banks are the hearts of the economy and if they are in good health, economy is secured, Shaukat Aziz remarked. However, he suggested them to reduce the processing time, cycle time, simplify the multiple approval systems so that maximum growth in activity could be achieved, which he added, would help the bank to grow.—APP