LAHORE: State Bank of Pakistan (SBP) Governor Dr Reza Baqir said on Tuesday the SBP was making efforts to enhance financing for maize crop in the country. He said the SBP has chosen Chunian for the launch of Electronic Warehouse Receipt Financing (EWRF) due to a phenomenal maize production in the area.
We wanted to encourage the area which has already shown startling results in terms of per acre yield of maize crop, he said. He said both the districts of Okara and Kasur were contributing 25 percent of the total maize production in the country.
He was addressing a gathering at the launching of Electronic Warehouse Receipt Financing (EWRF) for maize crop on Tuesday in Habibabad, district Kasur. Leading bankers from across the country also attended the event and signed their System Usage Agreements with Naymat Collateral Management Company Ltd (NCMCL) to commence operations under this newly developed system.
He said the contribution of the agriculture sector to the national GDP comes around 40-45 percent. Its output turns into an input to many allied industries. Therefore, the agriculture sector plays vital role in the value theme of the government, he added.
According to him, the performance of the banking sector could easily be judged and the SBP was supporting the industry to make an outreach in the agriculture sector effectively. Regarding the EWRF, he said, this mechanism will not only provide farmers with an adequate facility to store their produce, but also address their liquidity requirement as these receipts will be used as a collateral to avail financing from banks.
SBP to launch EWRF for maize crop
He said the SBP was working on improving the agriculture sector access to the banking industry. The Advisory Committee on Agricultural Finance is already operational in the SBP. In a recent meeting of the committee in Multan, the bank examined the role of banking sector towards the agriculture sector. How many loans have been offered to farmers and what should be the next year target.
The SBP had set a loan disbursement target of Rs 1500 billion for the banks last year. The banks extended Rs 1365 billion loans to the agriculture sector up to 30 June 2021. Despite lagging the actual target, the banks had shown improvement in loan disbursement comparing to the previous year for what I am thankful to their managements.
Highlighting the problem of hurdles in getting loans from banks by small farmers, he explained that 90 percent farmers are bracketed as small farmers but they could get only 40 percent of the bank loans yearly. This means that we need of work more on this front. For the current fiscal, he said, the SBP has set a target of Rs 1700 billion agricultural credit for the banks and I am sure that banks would meet it successfully.
He said the warehouse receipts will be issued by approved collateral management companies in arrangement with their accredited storage facility operators. The value of stored harvest will be assessed and marked on the electronically issued warehouse receipts, which can then be used to avail financing from banks.
Through this initiative, he added, the SBP aims to achieve multiple objectives including enhanced availability of formal credit to farmers who otherwise do not have acceptable collateral to secure bank financing; minimize post-harvest losses through a network of accredited warehouses where standardized agricultural produce can be stored, and ensure better price discovery to increase farmers’ profitability and guide them in making better farming decisions.
The system has been developed through collaborative efforts of various stakeholders including State Bank of Pakistan, Securities & Exchange Commission of Pakistan, federal and provincial governments, and banks, among others. Presidents of Bank of Punjab and Habib Bank Ltd distributed cheques amongst farmers against receipts of warehouses on the occasion.
Copyright Business Recorder, 2022
Comments
Comments are closed.