In Pakistan 90 to 94 percent farm loans offered for production and only 6-10 percent for Agricultural development. According to the State bank of Pakistan [SBP], the share of development loans in total agricultural finance stood at 6 percent from 2018 to 2019.
This percentage improved to 6.7 percent from 2019 to 2020 and further to 10 percent in the first seven months of this fiscal year.
Among other things, this factor is also responsible for keeping our agriculture where it is today. Under-exploited, low on productivity, high on wastage, slow-processing, and least prepared for future challenges.
According to the World Bank’s summation in October of 2020, The development and commercialization of agriculture require. Furthermore, financial services that can support: Larger agriculture investments and agriculture-related infrastructure that requires long-term funding. Greater inclusion of youth and women in agriculture, and advancements in technology. To greater extent how the agricultural financing should be overhauled in most developing countries Pakistan is no exception.
Moreover, The SBP should consider assigning sub-targets for agricultural development loans to banks. The country has been playing its part in making efforts to restructure its agriculture finance regime. Alternatively, Some examples can be found in these ongoing efforts in the introduction of measures like warehouse recipe financing and greater involvement of micro-finance institutions in agricultural lending.