MULTAN: State Bank of Pakistan (SBP) Governor Ashraf Mahmood Wathra on Friday urged banks to rationalise lending rates for the agriculture sector.
While chairing the annual meeting of the Agricultural Credit Advisory Committee (ACAC), the SBP governor said banks met their agriculture credit target in 2015-16 and have achieved 43 per cent of the indicative target for the current fiscal year. This reflects thriving business and huge cash flows in the agriculture sector, he said.
Earlier on Thursday, National Assembly members demanded agriculture credit at interest rates that are on a par with ones being offered to traders and industrialists.
The benchmark interest rate is 5.75pc. While banks are extending credit to industrial clients at single-digit interest rates, farmers have to pay the cost of funds at 14-16pc per annum, MNAs said.
According to the SBP governor, banks disbursed agricultural credit amounting to Rs598.3 billion in 2015-16 against the annual target of Rs600bn. It was 16pc higher than the disbursement of Rs515.9bn made in 2014-15.
For the first six months of 2016-17, financial institutions have disbursed Rs301.7bn, which is 43.1pc of the indicative target of Rs700bn for the fiscal year.
Mr Wathra urged banks to understand the needs of the economy and focus on agriculture financing. The sector involves huge cash flows and contributes significantly to GDP with strong backward and forward linkages, he added.
Senior SBP officials, bank CEOs and representatives of the federal and provincial governments and farmers’ associations attended the meeting.
The governor said the SBP has taken on the role of a facilitator and developmental partner of financial institutions to accelerate growth in agriculture finance.
courtesy : dawn news