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Farmers ‘unhappy’ with govt’s agricultural loan claims

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The farming community Wednesday demanded further measures from the government despite the State Bank of Pakistan (SBP) report revealing that a substantial amount of Rs1.78 trillion was disbursed by the financial institutions during the fiscal year 2022-23 under the outgoing Prime Minister Shehbaz Sharif’s initiate, ‘Kissan Package’.

The central bank, in its annual report released today, stated that the financial institutions achieved 97.6% of the agriculture credit target of Rs1,819 billion set by the SBP; however, the farming community painted a different picture.

Agriculture Republic Co-founder Aamer Hayat Bhandara, while speaking to Geo.tv, said: “Definitely, the money has poured into the agriculture sector but people faced issues when they sought loans.”

He elaborated that the youngsters, especially, were among those who faced challenges when they contacted banks for loans.

“Banks demanded papers of their land to mortgage the loan; however, mostly the lands are usually registered under their parent’s name as it is a culture here,” he said, adding that therefore, under the prime minister’s plan to encourage and facilitate the youth of Pakistan to adopt agriculture as their occupation has not fully been realised according to the spirit.

Bhandara lamented that under such circumstances the middleman becomes the beneficiary. The purpose of these loans was to enable the farmer to purchase inputs of the yield.

While the government aims to minimise the role of exploiters sitting in the market, their hold gets stronger because when farmers cannot get loans from formal channels, the banks, they go to informal sources, the middleman, who exploits them by applying higher interest rates, he highlighted.

“They exploit farmers and customers alike by first offering loans at higher interest rates and then selling the product at higher prices to the customers, even though they buy products way cheaper from the farmers,” he revealed.

It should be noted that according to the SBP report, the number of loans grew by over 25% compared to Rs1,419 billion disbursed in the fiscal year 2021-22. The outstanding portfolio of agriculture credit also registered a growth of 10% and reached Rs760 billion at the end of June 2023 compared to Rs691 billion at the end of June 2022.

The unprecedented performance in FY23, according to the central bank, was attributed to the collective efforts of the financial institutions and various initiatives taken in the backdrop of several challenges including the devastating floods of 2022, rising input costs and monetary tightening in recent years.

The SBP mentioned that among the various initiatives, SBP’s Champion Bank Model and Agriculture Credit Scoring Model played a key role in supporting financial institutions in extending agriculture financing, particularly in the underserved areas where significant growth was registered in FY2023.

“In addition, the strategic guidance of Agricultural Credit Advisory Committee (ACAC) coupled with rigorous monitoring of financing by SBP provided further support in accelerating agriculture finance,” the report read, adding that the last ACAC meeting, held in December 2022, brought the industry’s focus to the potential of Islamic banking for meeting the needs of the farming community. As a result, Islamic agriculture financing also grew significantly during the year.

Endorsing Bhandara’s views, Concave Agri Services President Muhammad Ali Iqbal told Geo.tv that the amount disbursed under the agri credit schemes by the financial institutions has not made a significant impact on the financial requirements of small and medium farmers.

It was learnt that under the Kissan Package, mostly credit facilities were provided against Agro-machinery with around a 7% interest rate to be paid by the farmers on a district-wise quota basis.

“This kind of facilitation did enable the large-scale farmers to reap benefits. However, due to the rupee-dollar parity the prices of machinery also escalated significantly,” he said.

Citing the report, Iqbal mentioned that the input products’ prices have also increased at least 50% making farming resources meagre for the small and medium farmers. In return, the financial credit requirements also surged outstandingly making it easier for banks to achieve the given target by the central bank.

“It is pertinent to mention that the average loan size for agriculture was around over one million per farmer, which is way beyond the requirements of the small landholders,” he maintained, suggesting that it is now better for policymakers to introduce micro and small credit facilities with concessional interest rates to make farming easy for small and subsistent farmers.

Moreover, the central bank — in a statement released along with the report — highlighted that the state bank’s efforts were further bolstered by the prime minister’s Kissan Package, which provided stimulus to revive the flow of agriculture financing especially in the flood-affected areas. Under the Kissan Package, various measures were implemented to strengthen the agriculture sector in flood-affected regions, which included a waiver of markup on outstanding small loans, interest-free loans for small and marginalized farmers, and risk coverage for banks.

It should be noted that the SBP has also released the annual ranking of banks under the Agriculture Credit Scoring Model to bring transparency and competition among the various agriculture credit providers.

SBP’s scoring model gauges the agriculture credit performance of banks against a multi-dimensional criterion with a particular focus on regional and sectoral performance. Introduced in FY22, the model facilitated the banks to focus on areas where improvement is required to achieve their targets, particularly on improving qualitative aspects.

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April FDI in Pakistan increased to $358.8 million, according to SBP

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The inflow for April was $358.8 million, up 177% from $132 million in April FY23. Still, that was 39% more than the $258 million from March.

China was the largest investor, with $439.3 million in FDI from the nation between July and April of FY24—the greatest amount—as opposed to $604 million during the same period of FY23. In April, China accounted for $177 million of the total investment.

With $51.93 and 51.89 million invested in Pakistan, the United Arab Emirates and Canada came in second and third, respectively.

The power industry was the main draw for foreign investors in FY24, which ran from July to April. This period’s FDI in the power industry was $637.5 million, compared to $776.2 million the previous year. From $338 million to $460 million this year, Hydel Power garnered more attention.

Continue reading: In FY23–24, Pakistan’s per capita income increased to $1680.

According to a separate data released on Wednesday, Pakistanis’ per capita income increased to $1680 in FY2023–2024.

The size of the national economy grew from $341 billion to $375 billion in the current fiscal year, according to figures made public by PBS.

Throughout this fiscal year, Pakistanis’ yearly per capita income increased by Rs 90,534; the monthly rise was Rs 7,544.

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OGRA forbids the purchase or sale of inferior LPG cylinders.

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The 313 LPG marketing and 19 cylinder-producing companies received notices from the OGRA, which described the act of refilling inferior LPGO cylinders as harmful.

Avoid supplying LPG to unlicensed distributors, the OGRA has cautioned LPG marketing companies. Only approved distributors will be able to sell and buy LPG going forward, per the notification, which states that new SOPs have been developed for the LPG industry.

Additionally, the warning said that the decision was made in an effort to preserve both lives and the business in response to an increase in cylinder blast occurrences.

Price reductions of Rs 20 per kilogramme for liquefied petroleum gas (LPG) were implemented in Quetta on May 3.

There is a reduction of Rs 20 on LPG prices, which means that the price per kilogramme drops from Rs 280 to Rs 260.

The costs of LPG were reduced by Rs 20 per kilogramme earlier, bringing the total decrease to Rs 40 per kilogramme over a few weeks. This is something worth noticing.

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PIA announces a significant student discount.

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According to an airline spokesman, the national flag carrier has recently raised the baggage allowance to 60 kg.

Currently, PIA flies one flight per week on Sundays between Islamabad and Beijing.

The discount may be useful to students who intend to spend their summer vacations in Pakistan or who wish to return home after earning their degrees.

Before, students who wanted to visit China could now receive a 27% reduction on their fares through PIA.

On Eid ul Fitr, the national flag airline also reduced the cost of domestic flights by 20% for both economy and executive economy classes.

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