Banks given agricultural lending target of Rs 1.8 trillion for FY 2023

KARACHI: The State Bank of Pakistan (SBP) has assigned an annual agricultural credit disbursement target of Rs 1.8 trillion to financial institutions for this financial year to meet the demand for agricultural credit in the country, it said. a press release on Friday.

Further, in line with national food security requirements and the need to mechanize farms to improve agricultural productivity, specific targets of Rs 140 billion for wheat crop production loans, Rs 45 billion of rupees for financing tractors and 20 billion rupees for financing harvesters, planters, and other agricultural machinery have also been set as part of the overall target for the financial year 2023.

In addition, the SBP has also strengthened indicative credit limits per acre for agricultural financing to help the farming community secure adequate financing from banks and optimize the use of their agricultural inputs. To ensure food security, the indicative credit limit per acre for wheat has been raised from the existing Rs 60,000 to Rs 100,000, which will enable farmers to deploy quality inputs for better yields.

In the financial year 2022, financial institutions managed to disburse 1.41 trillion rupees to the agricultural sector, compared to 1.36 trillion rupees in the previous year, while the stock of agricultural credit recorded an encouraging growth by more than 10% and reached 691 billion rupees at the end of June 2022.

The unprecedented disbursement and growth of the agricultural credit portfolio has been supported by various recent SBP initiatives aimed at promoting agricultural credit and financial inclusion in the country, the SBP said.

“One of the major recent initiatives of SBP has been the introduction of a comprehensive agricultural credit scoring model to get banks to focus on improving the qualitative aspects and regional distribution of agricultural finance in the country” , did he declare.

“The model, adopted by the Agricultural Credit Advisory Committee, provides individual scores reflecting each bank’s agricultural credit performance against multidimensional criteria based on various indicators, including sector disbursement, regional performance, outstanding and current borrowers, etc.”, he added. .

Recently, the growth of agricultural credit disbursements has remained subdued due to various challenges such as adverse effects of climate change, resource constraints in banks, underutilization of limits approved by borrowers, etc., while a few banks, particularly large public sector banks, among others, also recorded slower performance. than usual and struggled to meet the annual targets assigned to them, according to the SBP.

The central bank also published the annual ranking of banks according to this rating model to bring transparency and competition between the different providers of agricultural credit.

According to the model results for fiscal year 2022, HBL ranked first among major banks with a score of 75.4. Bank of Punjab scored 62.1 and ranked first among medium-sized banks, and BankIslami ranked first among small banks with a score of 55.7. In addition, U Microfinance Bank ranked first among microfinance banks with a score of 80.4.

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