State Bank of Pakistan (SBP) Governor Dr Reza Baqir on Friday announced a series of measures to attract investment in the construction of new warehouses/silos to boost Electronic Warehouse Receipt Financing (EWRF).

The measures were announced as Baqir chaired the first meeting of the task force on EWRF, which is a high-level forum established recently to promote agriculture finance and food security, the SBP in a statement said.

The measures include; i) increase in the tenor of SBP’s Financing Facility for Storage of Agricultural produce (FFSAP) loans from current 7 years to 10 years to make it more attractive for investors by creating a long payback period; ii) increase in the grace period from 1 year to up to 2 years to provide additional flexibility to investors of such projects and adjust repayment due to time lag involved in the construction of new storage facilities, and iii) revision in repayment terms from monthly to quarterly/six monthly to align the facility with the seasonality in the agriculture sector.

SBP increases indicative credit limits for agri financing

The central bank informed that financing under FFSAP is available at 6% per annum to end-users on a long-term basis for construction, expansion and balancing, modernization & replacement (BMR) of steel/metal/concrete silos, warehouses & cold storage facilities for storing agricultural produce.

During the meeting, Governor SBP termed EWRF endeavours to be an essential component of formal credit to farmers who do not have acceptable collateral to offer to banks.

Last month, the SBP had rolled-out the action plan for EWRF at the launch event and roadshow held in Chunian, District Kasur, where 25 banks signed their Service Usage Agreements with Collateral Management Company to commence EWRF operations.

In his address then, the SBP chief stated that the central bank has set a target of Rs1,700 billion agricultural credit for the banks for the current fiscal year.