Banks want to enhance support for agri & technology sectors

PBA presents recommendations to finance minister about promoting growth and sustainability in these vital sectors.

KARACHI: Pakistan Banks’ Association (PBA) held a meeting with Minister for Finance and Revenue Muhammad Aurangzeb to discuss ways aimed at enhancing support for the three key sectors of agriculture, Small and Medium Enterprises (SMEs) and Digital and Technology in Pakistan.

The minister mentioned that the idea shall be to encourage the entire sector to contribute towards these priority sectors as per their size and unique offerings and strengths.

While there will be no “directed lending”; there shall be voluntary targets to be set between the banks and the regulator to share the responsibility to contribute towards these critical sectors. He expected the banks to step up and continue to work with the government in the revival and the growth of the economy.

Chairman PBA Zafar Masud along with the steering committee members presented a comprehensive set of recommendations aimed at promoting growth and sustainability in these vital sectors.

The proposals were developed in close consultation with SBP to ensure they effectively address the unique challenges and highlight the opportunities within each sector.

The key recommendations in the agriculture sector included, among other steps, restructuring crop loan insurance schemes to integrate crop yield factors, revitalizing agricultural cooperative banks and upgrading provincial agricultural cooperative legislations to facilitate the creation of agricultural cooperative lending institutions.

The recommendations also included exploring technology-driven solutions to facilitate the distribution of targeted subsidies through banks, particularly to the subsistence-level farmers, similar to BISP, to promote much-needed financial inclusion.

The minister was told that PBA and SBP were actively engaged to revising SME prudential regulations, enhancing clean financing limits, and reviewing regulatory retail portfolio limits to facilitate SME financing.

The minister was informed that PBA is contemplating to establish “SME and Agriculture Index” to target the customers currently outside the documented economy while also enhancing credit risk management.

It was emphasized that banks be allowed to offer products and services in technology space, currently only used for their own operations, to the outside world to harness export flows. The recommendations related to documentation of the economy through the use of technology were also discussed, and outlined the role that the banks will play in furthering Government’s efforts in this respect.

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