LAHORE: Small and medium-sized businesses (SMEs), digital and technology, and agriculture are three key sectors that the banking sector has recommended are crucial for fostering growth and sustainability, according to Federal Minister of Finance and Revenue Mohammad Aurangzeb.
The minister explained that the aim of this program was to urge the whole sector to contribute to these key areas based on their size, unique services, and strengths at a meeting with a delegation of the Pakistan Banks’ Association (PBA).
There won’t be “directed lending,” but the regulator and banks will jointly set voluntary goals for how much each will contribute to these vital industries.
He expressed hope that the banks will keep assisting the government in reviving and expanding the economy.
Restructuring crop loan insurance plans to incorporate crop yield factors, revitalizing agricultural cooperative banks, and modernizing provincial agricultural cooperative laws to ease the establishment of agricultural cooperative lending institutions were among the major recommendations made in the agriculture sector.
In order to foster much-needed financial inclusion, the recommendations also included looking into technology-driven ways to make it easier for banks to distribute targeted subsidies, especially to subsistence-level farmers. These solutions would be comparable to the Benazir Income Support Programme (BISP).
The main goals of the meeting were to strengthen bank support for Pakistan’s three important industries: SMEs, digital and technology, and agriculture. The conversation emphasized the banking industry’s dedication to promoting financial inclusion in the nation.
PBA Chairman Zafar Masud gave a detailed set of proposals at the session, accompanied by members of the steering committee on these efforts. The State Bank of Pakistan (SBP) was closely consulted during the development of the recommendations to guarantee that they adequately tackled the distinct obstacles and emphasized the prospects in every industry.
In a same vein, it was decided that banks aggressively support organizations like the National Credit Guarantee Company Limited (NCGCL) and the Small and Medium Enterprises Development Authority (SMEDA) financially and administratively.
The minister was informed that PBA and SBP were actively working to improve clean financing limitations, update SME Prudential Regulations, and review regulatory retail portfolio restrictions in order to make SME financing easier.
In addition to improving credit risk management, he was told that PBA was thinking of creating a “SME and Agriculture Index” to target clients who are not already part of the formal economy.
Regarding digital and technological aspects, the PBA suggested enabling foreign retail investment via digital micro-sukuks and infrastructure bonds and incorporating independent contractors into payment gateways. It was suggested that Pakistanis living abroad use specifically created internet sites to increase their international remittance flows. In order to maximize export flows, it was emphasized that banks should be permitted to provide technology-related goods and services to the outside world, as they are currently solely utilized for internal business purposes.
The ideas for using technology to chronicle the economy were also considered, and they outlined the part banks would play in supporting the government’s efforts in this area.
Mr. Aurangzeb praised the PBA steering committee’s and the corresponding task groups’ comprehensive study and insightful recommendations for the three sectors that were determined to be priority areas. In order to promote economic development and prosperity, he emphasized the critical role that the banking industry plays in accelerating economic growth and the significance of banks stepping up their support of these priority areas.
Leading the charge along with the SBP governor, the minister approved the governance framework for putting the PBA’s suggested measures into action in collaboration with SBP and the Ministry of Finance and Revenue.
Speaking at the event, the PBA chairman pledged, “PBA and its members are fully committed to working closely with the Ministry of Finance and the SBP to implement these recommendations, ensuring the effective contribution of the banking sector to Pakistan’s economic prosperity.”
