Jameel Ahmad, governor of the State Bank of Pakistan (SBP), encouraged banks on Thursday to execute the Kissan Package in letter and spirit and pledged to provide all necessary help to the banks.
The governor mentioned the recent floods’ destruction while presiding over the annual meeting of the Agricultural Credit Advisory Committee (ACAC) in Hyderabad. He also noted that climate change is the biggest long-term threat to the nation because of its unpredictable effects.
While the government, businesses, and society are aware of these concerns, he argued, we still need to move quickly and allocate the necessary funds for the research and development of pertinent products and services as well as the capacity building of stakeholders to deal with them in advance.
He commended banks for disbursing Rs. 1,419 billion in agricultural finance in FY22. He stated that a target of Rs. 1,819 billion has been set for FY23 in accordance with the government’s priorities and added that Rs. 664 billion have already been disbursed during the first five months of FY23.
The governor reported that the prime minister had announced the Kissan Package, which includes, among other support measures, risk sharing for farm mechanisation, interest-free loans for subsistence and landless farmers, interest mark-up waivers for outstanding small loans in flood-affected areas, and interest-free and subsidised loans.
The governor further emphasised that, in light of SBP’s recent commitment to converting conventional banking to Islamic banking within the next five years, banks have a significant chance to capitalise on the untapped potential of Islamic agriculture finance.
He pointed out that the proportion of Islamic financing in agriculture finance is still fairly low and asked the sector to work on creating Islamic financing products that are driven by demand and are especially suited to the needs of the farming community.