Innovations in Rural and Agricultural Finance - page 9

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(SBP), the central bank. Over the last few years, SBP has taken some ground-breaking initiatives to uplift
nancing to the farmers and small andmediumentrepreneurs:
It has revamped Prudential Banks for Agricultural Financing whereby banks have been advised to
formulate all-inclusive agri-nance policies and set updedicated agri divisionswithin banks.
The scope of agri-nancing has been widened to include value chain nancing and Islamic mode of
nancing.
The per acre credit limits for crops, orchards and forestry, previously set in 2008, have been revised. This
was done to meet the enhanced credit requirements of farmers and also increase the agri credit portfolio of
banksmanifold. Farming community and banks have been overwhelmed by this initiative.
The signicance of livestock is well known and it accounts for 55 percent of Pakistan's agriculture GDP.
However, the share of credit to livestock is disproportionately small due to high risk perception. Therefore,
to address this issue, SBP has introduced a Livestock Insurance Scheme for borrowers tomitigate risk of loss
of livestock due to disease, natural calamities&accidents.
To ensure diversity of agri-nancing institutions, SBP has included Micronance Banks and Islamic Banks
into indicative targets for agriculture nance.
The Agricultural Credit Advisory Committee (ACAC), which is the apex consultative forum for agri-
nancing with representation from all the relevant federal & provincial departments, farming community,
banks and experts, has been re-activated.
The ACAC set agenda to boost agri nancing. This includes launching of the second round of Financial
Innovation Challenge Fund (FICF) under the UKAID-sponsored Financial Inclusion Program, to promote
innovative techniques in agri and rural nancing.
State Bank of Pakistan has launched a country-wide Internship Programme for 100 top graduates in
agriculture to be fundedunder theADB's ImprovingAccess to Financial Services Endowment Fund.
Banks have been assigned targets for agriculture portfolio outstanding and number of borrowers to have
high impact of nancing at grass roots level.
SBP has made agricultural nance a key indicator of performance of banks which will be reected in their
supervisory ratings.
A working group of ACAC has been formed to review the state of affairs of small farmers nancing and
make recommendations for improving nancial access to small farmers.
(Source: Welcome address byMr Ashraf MahmoodWathra, Acting Governor of the State Bank of Pakistan,
at the launching ceremony of the Financial InnovationChallenge Fund)
C. BangladeshExperience
I shall now turn towards the most densely populated nation of South Asia, i.e. Bangladesh. Bangladesh is
one of the most densely populated countries of the world; and mostly rural. Farmers of Bangladesh are
generally resource poor. Small and marginal farmers constitute 80 percent of the farming population in
Bangladesh. But only 17 percent of the small farmers have direct access to institutional credit. Bangladesh
expanded rural credit through NGO route. Bangladesh has been the global pioneer in taking NGO route. In