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ISLAMABAD, Apr 29 (APP): The Senate Functional Committee on Problems of Less Developed Areas has discussed and assessed the role of the banking sector in promoting and supporting the agricultural sector, which constitutes 80 percent of the country’s economy.
The meeting was held under the chairmanship of Senator Agha Shazaib Durrani. The session was attended by Senators Syed Kazim Ali Shah, Falak Naz, Danesh Kumar, Aimal Wali Khan, and Senator Hamid Khan, said a press release on Tuesday.
The Governor of the State Bank of Pakistan (SBP) and the President of the National Bank of Pakistan (NBP) were also present to provide valuable insights into the current state of agricultural financing in the country.
The committee received a detailed briefing on the distribution of agricultural credit through various schemes, including credit guarantee initiatives aimed at promoting rural finance for marginalized farmers, especially in the livestock and dairy sectors in less developed areas. It also reviewed the role of the banking sector in facilitating small and medium enterprises (SMEs) and corporate businesses in these regions.
Both the Governor of the State Bank and the President of the National Bank of Pakistan presented various plans and schemes aimed at promoting agriculture and aiding farmers. However, the committee expressed dissatisfaction with the limited role played by the banking sector in advancing agricultural development, particularly in less developed areas.
Senator Durrani pointed out that only 10 percent of the country is developed, while 90 percent remains underdeveloped, stressing that no special initiatives have been undertaken to address this disparity.
The committee chairman highlighted the absence of concrete measures for public awareness regarding the Kissan Package (Farmers’ Package), which offers financial relief to farmers. He also noted that private banks had taken up agricultural financing primarily as a business venture, with little regulatory action from the State Bank to improve the situation.
The committee noted that the State Bank has made no significant effort to promote agriculture or engage with the banking sector on this issue. Senator Durrani emphasized that international models, such as the specific funds for underdeveloped areas seen in countries like the USA, could serve as a blueprint for Pakistan.
The committee reviewed the latest figures related to agricultural credit disbursement for the fiscal year 2025 included Agricultural Credit Performance (July-February 2025), Agricultural loans disbursed: Rs. 1,654.8 billion (64.3 percent of the annual target for FY25), the outstanding agricultural loan portfolio reached Rs. 933.2 billion by February 2025, and showing a 15 percent growth compared to the previous year.
The number of outstanding agricultural borrowers stood at 2.85 million by the end of February 2025, marking a 4.9 percent year-on-year growth such as Regional Distribution of Loans (July-February FY25), Punjab: Rs. 1,269 billion (64.3% of total disbursements), Sindh: Rs. 329.9 billion (67.7% achievement), Khyber Pakhtunkhwa: Rs. 39.8 billion (49.6% achievement), and Balochistan & other regions: Rs. 16.2 billion.
The committee also discussed the “Kissan Package”, under which Rs. 2.96 billion in interest was waived off for flood-affected farmers. As part of the scheme, 102,663 farmers benefited across various provinces, including Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan.
The committee raised concerns regarding the disproportionate allocation of funds, with 80 percent of the agricultural credit being granted to Punjab, which is not considered a less developed region. The committee emphasized that this skewed distribution of funds neglects the needs of less developed areas, particularly in the tribal regions of Bajaur, South Waziristan, and North Waziristan.
Senator Durrani stressed the need for the adoption of international best practices to address the challenges faced by less developed areas. He pointed to the success of specific funds for underdeveloped areas in the United States and suggested that Pakistan could implement similar mechanisms to promote agriculture and rural development.