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Farmers seek credit policy review

by Asad Khan
Published: Last Updated on
KARACHI: Businessmen and farmers believe that the credit policy of Zarai Taraqiati Bank Limited (ZTBL) should be reassessed to cater to the modern needs of the agriculture sector.

In collaboration with the federal government, this agriculture-specific bank should adopt prudent lending, stringent accounting controls, innovative banking solutions and austerity measures for a turnaround in the long term as it was still in the era of the 1980s, said Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Standing Committee on Agriculture’s former chairman Ahmad Jawad.

Currently, the ZTBL and other regular banks have no institutional means to gather meaningful data of farms and rural businesses, he said. “They are simply not equipped to make informed agriculture financing.”

ZTBL was opened to provide agriculture loan facilities to the farmers to develop the agriculture sector, said Sindh Chamber of Agriculture President Miran Mohammad Shah. “Soft loan schemes for tractor and other agriculture implements were its success story.”

ZTBL has a one-window operation policy through the mobile credit officer (MCO), which was very effective and was reaching out to the small farmers.


However, lately no such scheme for agriculture credit was unveiled. “If such schemes are actually announced, they are not publicised on a large scale,” he said.

“ZTBL is now not a major player,” remarked Sindh Abadgar Board (SAB) Senior Vice President Mahmood Nawaz Shah. “Its financial portfolio in the past few years was about Rs80 billion while the total agriculture credit portfolio is Rs1.7 trillion.”

The bank’s credit policy “is based on recoveries; it lends what is recovered. There is no new money flowing in,” he said. “ZTBL has a strong presence in rural areas and the officers have expertise in agriculture but their role is minimal in terms of agriculture credit.”

“Without formal financing, agricultural transformation is not possible,” commented Jawad. As a result, the population will continue to face food supply issues and the farmers will be at the mercy of the middleman and local money lenders.


“Give us competitive agriculture financing and we will give you growth,” as the agriculture sector has the potential to take growth to 5% of gross domestic product (GDP).


ZTBL’s initiatives are necessary to strengthen farmers’ lives and the agriculture sector as a whole. However, the organisation has failed to increase the number of clients substantially, he said.


It is unfortunate that the bank’s officials do not interact with the farming community, especially in Sindh, G-B and K-P. “ZTBL just revolves loans in books as the disbursement and recovery is recorded in papers, an act which is against the principles of its foundation.”

Today, ZTBL has become a loan recovery institution as the farmers delay the repayment of debt due to financial constraints.

Further, farmers undergo enormous inquiries to get a loan on simple passbook while the amount sanctioned against it is very small and of no effective use for their agriculture needs.

The passbook loan facility of the ZTBL was launched during the time of Zulfikar Ali Bhutto, said Shah. Bank’s policies are effective but need to be implemented, he added.

Agriculture credit has become a stigma in bureaucratic circles of Islamabad. Policy makers must give an extra effort to improve the performance of the bank, which indirectly would boost the agricultural sector.

I wonder how small farmers could bear the financing facility with the ongoing rates of the KIBOR, Jawad questioned. “The ZTBL’s President must understand that it is not a commercial bank and it has a role to serve Pakistan’s agriculture sector.

Pakistan spends a huge amount of around $2 billion on import of edible oils every year. In order to save the precious foreign exchange, it was the duty of the ZTBL to introduce concessional loans for the farmers to encourage them sowing soybean, canola and sunflower over larger areas of the country, but the ZTBL failed to offer such incentives,
he regretted.­­

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