The unprecedented performance in FY23 is attributable to the
collective efforts of the financial institutions and various initiatives taken
in the backdrop of several challenges including the devastating floods of 2022,
rising input costs and monetary tightening in recent years.
Among the various initiatives, SBP’s Champion Bank Model and
Agriculture Credit Scoring Model played a key role in supporting financial
institutions in extending credit to the farmers, particularly in the
underserved areas where significant growth was registered in FY23.
In addition, the strategic guidance of Agricultural Credit
Advisory Committee (ACAC) coupled with rigorous monitoring of financing by SBP
provided further support in accelerating lending to the farmers.
The ACAC meeting held in December 2022, brought industry’s
focus to the potential of Islamic banking for meeting the needs of the farming
community. As a result, lending to the farmers by banks undertaking Islamic
banking also grew significantly during the year under review.
SBP efforts were further bolstered by the Prime Minister’s
Kissan Package, which provided stimulus to revive the flow of agriculture
financing especially in the flood affected areas. Under the Kissan Package,
various measures were implemented to strengthen the agriculture sector in
flood-affected regions, which included waiver of markup on outstanding small
loans, interest-free loans for small and marginalized farmers, and risk
coverage for banks.
A subsidized scheme for purchase of farm machinery was
introduced to promote mechanization and ensure national food security.
Moreover, agro-based SMEs were included in SBP's Refinance Facility for
Modernization of SMEs and Prime Minister's Youth Business and Agriculture Loan
Scheme, which provided affordable loans to the agriculture sector.
SBP has released the annual ranking of banks under the
Agriculture Credit Scoring Model to bring transparency and competition among
the various agriculture credit providers. SBP’s scoring model gauges the
agriculture credit performance of banks against a multi-dimensional criterion
with particular focus on regional and sectoral performance.
Introduced in FY22, the model facilitated the banks to focus
on areas where improvement is required to achieve their targets, particularly
on improving qualitative aspects.
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