Saturday, 6 December 2014

Farm sector credit: National Assembly panel questions veracity of government''s claim

A panel of National Assembly has contested the veracity of government''s claim on increasing farm sector credit target to Rs 500 billion from Rs 390 billion. A sub-committee of National Assembly was convened here on Friday with Danyal Aziz in the chair to discuss measures to improve equal opportunities in the banking sector for credit between rural and urban areas.

Later, talking to reporters, stated that non-farm credit and farm credit have been combined to show a higher disbursement to agriculture sector. The committee stated that there is a need to conduct the audit to discover as to how much credit was disbursed to the farm sector. The chairman of the committee stated that the government needs to tell the committee about the people who have been provided credit.

An official of State Bank of Pakistan said that Zarai Taraqiati Bank Limited (ZTBL) human resources sector has been responsible for the poor deposits of the bank. He said ZTBL has been borrowing from SBP. He added that ZTBL''s share in Rs 500 billion credit target is only Rs 50 billion and the remaining amount of Rs 450 billion would be contributed by commercial banks. Aziz said the investment in agriculture sector has to be increased to ensure food security and bring down the prices of essential commodities. Aziz further stated that restructuring has not benefited the agriculture sector.

Officials of ZTBL requested the committee to suggest provinces that they should provide a subsidy to agriculture sector through ZTBL as this would help increase the bank deposits. The meeting was told that traditionally, financial services of banking system in Pakistan and elsewhere remain concentrated in urban markets and to improve a mechanism for equal opportunities in the banking sector, SBP has taken various policy measures and market interventions for broadening access to financial services by both rural and urban areas. Broad measures taken to this effect include;(i) encouraging commercial banks to expand agriculture credit and making it mandatory for them to open 20% of their new branches in rural areas;(ii) establishing and fostering microfinance banking industry in Pakistan;(iii) promoting mobile phone banking through partnerships between financial institutions and telecoms;(iv) managing a comprehensive ''Financial Inclusion Program''. The meeting was also informed that agriculture sector contributes around 21 percent to the GDP and generates productive employment opportunities for 45 percent of the country''s labour force and 60 percent of the rural population.

Access to agriculture financing remains restricted both in terms of its depth and breadth. Against agri credit demand of Rs 790 billion for 2013-14, a total of Rs 391 billion was disbursed by banks. In terms of outreach, 2.2 million borrowers have been tapped by banks against a total of 8.3 million farming households in the country.
Copyright Business Recorder, 2014

No comments:

Post a comment

LinkWithin

Related Posts Plugin for WordPress, Blogger...