Banks Urged to Leverage Recent SBP Initiatives to Boost Agricultural Finance

KARACHI – The Deputy Governor of the State Bank of Pakistan, Mrs. Sima Kamil, on Wednesday appreciating the efforts of all stakeholders in implementing the various ACTA decisions, urged banks to take advantage of recent central bank initiatives and to accelerate efforts to boost agricultural financing and improve outreach, especially in under-served areas.
The Deputy Governor chaired the quarterly follow-up meeting of the Agricultural Credit Advisory Committee (ACAC) which reviewed progress on key decisions made by ACAC at its last meeting held in December 2021 and reviewed credit performance agriculture in July-April of the current fiscal year, the SBP statement said. The meeting provided an update on the new agricultural credit rating model for measuring bank performance adopted by the SBP and reviewed the results of the rating model up to March 2022.
HBL topped the large banks with a score of 63.7 out of 100, Bank of Punjab topped the medium-sized banks with a score of 65.2, Meezan bank had a score of 42.4, the most high among Islamic banks while HBL Microfinance Bank ranked first among microfinance banks with a score of 73.4. The participants were informed that the scorecards of all agricultural credit banks will be published annually on the SBP website.
Highlighting the overall performance of agricultural credit, Ms. Kamil appreciated the banks’ efforts to disburse Rs. for the year. However, she noted with concern the relatively slow performance in terms of the 1.4% decline in agricultural credit disbursements from the Rs 1.074 billion disbursed during the same period last year and attributed this to the slowdown in the performance of some large commercial and specialized banks.
The performance of medium-sized commercial banks, Islamic banks, and banks and microfinance institutions improved during the year. The President appreciated the growth in provincial disbursement of Farm Credit to all underserved areas. Disbursement in Balochistan increased by 73% in the July-April period of the current financial year compared to the same period last year, 55% in GB, 43% in AJK, 23% in Sindh and 17% in KPK. . The Chairman highlighted that this improvement was the result of various interventions, including the Champion Bank model that was adopted at the last ACAC meeting.
As of December 2021, ACAC had named six banks as champions for the underserved provinces/regions identified under the champion bank model. These include: HBL for Balochistan, HBL Microfinance Bank for GB, NBP for AJK, Bank of Khyber for KPK, UBL for Sindh and Bank of Punjab for the South Punjab region.

The six champion banks updated the committee on the activities carried out in their assigned regions under this initiative and presented their current developments and future action plans. Ms. Kamil, while praising the efforts of the champion banks, urged them to bend over backwards to achieve the desired goals.
Another key decision from the last ACAC meeting was to develop a strategy to promote electronic warehouse receipt financing (EWRF). The participants were informed that the EWRF adoption strategy has been developed and its various actions have been implemented, including the creation of an EWRF working group, the signing of use of banks’ services with collateral management company, assignment of EWRF targets to banks, and capacity building of stakeholders, among others.
Subsequently, a strategy for promoting climate-smart agriculture finance was also presented by a representative of the Association of Pakistani Banks, which focused on raising awareness among farmers and bankers, and also proposed the scaling up of existing products offered by banks in this area.
Presidents/CEOs and agricultural credit teams from commercial banks and SBP managers attended the meeting. The meeting ended with a vote of thanks to the President.