SBP Governor Urges Banks to Support Agriculture Sector

State Bank of Pakistan (SBP) Governor Jameel Ahmad Thursday urged banks to implement the Kissan Package in letter and spirit and assured full support to the banks wherever needed. While chairing the annual meeting of the Agricultural Credit Advisory Committee (ACAC) in Hyderabad, the governor referred to the devastation caused by recent floods and observed that climate change is the biggest long-term threat to the country due to its unforeseen impacts. He said that while the government, businesses, and societies are recognizing such threats, we need to take timely actions and allocate required resources for research and development of relevant products and services and capacity building of stakeholders to address them preemptively. He appreciated banks in achieving agriculture credit disbursement of Rs. 1,419 billion in FY22. He noted that for FY23, a target of Rs. 1,819 billion has been set in line with the government’s priority and added that during the first five months of FY23, Rs. 664 billion have already been disbursed. The governor said that the prime minister has announced the Kissan Package, comprising of restructuring and rescheduling of agriculture loans, mark-up waiver for outstanding small loans in flood-affected areas, interest-free loans for subsistence & landless farmers and subsidized loans, and risk sharing scheme for farm mechanization, besides other support measures. He elaborated that the package will facilitate the recovery of farmers from the impact of recent floods and urged banks to implement the package in letter and spirit. The governor also underlined that banks have a huge opportunity to exploit the untapped potential of Islamic agriculture financing with respect to SBP’s recent commitment to the transformation of conventional banking to Islamic banking in the next five years. He noted that the share of Islamic financing in agriculture financing is still quite low and urged the industry to work on developing demand-driven Islamic financing products, specifically tailored to the requirements of the farming community.