ISLAMABAD: Federal Minister for Finance Ishaq Dar has said that a holistic approach is needed for development of agricultural sector and finance in Pakistan.
He was speaking as chief guest at the launching ceremony of the 2nd Challenge Round of Financial Innovation Challenge Fund (FICF) on “Promoting Innovative Rural and Agriculture Finance in Pakistan.”
The programme is being funded by UKAid and implemented by the State Bank of Pakistan as part of “Pakistan Financial Inclusion Programme”.
He said that the partnership between Department for International Development (DFID) and State Bank of Pakistan (SBP) in promoting financial inclusion to reduce poverty in Pakistan had further strengthened the bond between the two countries. Congratulating the State Bank and the UK Government, he said that this would go a long way in promoting inclusive economic growth through provision of demand-driven innovative financial services for the low-income and unbanked population particularly our agricultural households and rural entrepreneurs.
He reminded the audience of measures taken by government in the 1990s which included banking sector reforms in Pakistan, adding that since then, Pakistan’s banking industry had witnessed a major transformation.
In his welcome address, Acting Governor State Bank of Pakistan Ashraf Mahmood Wathra said that financial innovation needs to be targeted towards the productivity of small farmers to combat poverty in rural areas. He said that tackling poverty demanded fundamental rethinking and innovation.
He reminded the audience that improving financial access to alleviate poverty was a global challenge. “More than 2 billion adults in the world do not have access to formal or semi-formal financial services. At the same time, one billion people with mobile phones do not have even a basic bank account.”
He said that both the Government and the State Bank of Pakistan were addressing the challenge using innovative policy approaches and actions.
Emphasizing the strategic role of agriculture in ensuring food security, generating economic growth, reducing poverty and inequality, Wathra said that financial services outreach in the rural sector could play the most indispensable role in this regard, he added.
He told the audience briefly about SBP’s initiatives for promoting financial inclusion through agricultural finance. These include advice to banks to formulate all-inclusive agricultural finance policies and set up dedicated agricultural divisions within banks; revision of per acre credit limits for crops, orchards and forestry which were previously set in 2008; livestock insurance scheme for borrowers; and inclusion of 7 microfinance banks into agricultural indicative target scheme.
Deputy Governor SBP Saeed Ahmad shared with the audience the progress of components of Financial Inclusion Programme. He said he was looking forward to receive quality proposals for testing innovative products and delivery channels to cater to the financing needs of the underserved rural and agricultural sectors in Pakistan.
The eventual aim of this FICF Round is to identify and leverage on the strengths of existing rural and agricultural ecosystem players (such as input suppliers, aggregators, processors, marketers etc.) and use them for opening up newer financing opportunities through formal financial institutions.
The audience was informed that the applicants would submit complete proposals by April 10, 2014. An independent advisory committee, drawing representation from DFID, private sector, and SBP, will review and approve the challenge round winners. Detailed guidelines, in print, were distributed and will also be available on SBP website for further guidance.
Head of the UK Department for International Development (Pakistan) Richard Montgomery, President of Habib Bank Limited Noman Dar, other banks’ representatives, both Members of FICF Advisory Committee Mahmood Nawaz Shah and Mansoor Arifeen, also spoke on the occasion.