Safeguarding Agriculture production through access to finance and insurance
DAWN Pakistan Food & Agri Expo Conference 2016
PRESENTATION BY:
Mr. Noor AhmedState Bank of Pakistan
Presentation Outline
SBP’s Three Pronged Approach towards Financial Inclusion
Proportionate Prudential Regulations to address Sector Specific Risk in Microfinance, SMEs, Consumer Finance, Agri, Islamic Banking etc
Challenge grants for innovations in Agri finance
Branchless Banking 1st A2F Survey
Public Private Partnerships -Risk sharing and Insurance Facilities
Smart subsidies for Capacity Building of providers
International partnerships with FAO & APRACA in Agri. financing
NFIS and focus on client capacity
Perceptive and Innovative Regulations
Development of Market info and Infrastructure
Capacity Building of providers and client
Financial Inclusion: SBP’s Strategic goal
Pakistan’s global recognition in Financial Inclusion
Pakistan’s Financial Inclusion efforts are being globally acknowledged
Pakistan’s MF Regulations and Business Environment rated amongst the best in the world (EIU report)
Pakistan ranked 5th in the world in promoting Financial Inclusion
CGAP acknowledged Pakistan’ Public Private Partnership for leading digital financially inclusive system
SBP amongst the founding members of AFI
State of Financial Inclusion in Pakistan
Level of Access– 42 million bank accounts– 28.1 million plastic cards issued– 15.2 million mobile financial
services accounts
Financial Inclusion - ProgressPercentage of Adult population that has:
2015 2008
A. Bank Accounts 16% 11%B. Other formal 7% 1%Formally Served (A+B) 23% 12%C. Informally Served 24% 32%Financially Served (A+B+C) 47% 44%Financially Excluded 53% 56%
Women availing banking services from 4% (2008) to 11% (2015).
Access Points − 11,469 Bank Branches− 44,383 POS devices− 10,100 ATMs− 301,823 BB Agents
Progress on Financial Inclusion Indicators
Sector Indicator Jun-11 Jun-12 Jun-13 Jun-14 Jun-15 Dec-15
Indicator of Access to Credit
SME FinanceOutstanding SME Finance (Rs. in Bn) 271 258 234 253 261 305
No. of SME Borrowers 157,658 149,421 144,141 134,521 152,495 158,387
Microfinance
Gross Loan Portfolio (Rs. in Bn) 28 34 47 61 81 90.79
No. of borrowers (No. in Mn) 2.030 2.232 2.635 3.144 3.507 3.630
Agricultural Finance
Agricultural credit disbursement (Rs. in Bn)
263 294 336 391 516 247 (half year)
No. of Agri borrowers (No .in Mn)
1.445 1.960 1.990 2.151 2.185 2.27
Housing Finance
Outstanding Housing Finance (Rs. in Bn) 62 57 52 53 56 61
No. of borrowers 95,553 87,059 79,478 74,894 70,080 70,498
Financing to agri. sector accelerated in last Seven years
(Rs. In Billion)
7
0
200
400
600
800 TargetDisbursement
Performance of Agriculture FinancingMore than half of the agri-financing
requirement is being met through formal channels
More farmers are being tapped each yearIndustry NPLs are decreasing
Changing Market Structure of Agri. Financing
Intervention for growth in Agri. financing
Shift from mandatory target regime to market based indicative targets
Enabling Regulatory environment for Agri. financing- Supportive PR. Inclusion of new banks including Islamic & Microfinance Banks Pilot Projects to focus underserved agri. intensive districts One Window Operations Risk Mitigation Tools like Crop & Livestock Insurance, Credit
guarantees Introduction of innovative models through FICF Capacity Building & Awareness for banks & farmers
De-risking Agriculture financing
Crop Loan Insurance Scheme Livestock Loan Insurance Scheme Contact Farmer Financing Agreements Credit Guarantee Scheme for small farmers
To mitigate the risk of losses due to natural calamity and encourage banks to finance agriculture and livestock sector, SBP with support of Government launched following de-risking tools for farming community specially for small farmers;
Objective: To share risk of farmers against natural calamities
Premium: Up to 2% per crop per season reimbursed to banks
Coverage: Five Major crops - wheat, rice, maize, cotton & sugarcane. Province wise small farmer’s classification and eligibility of farmers for CLIS in terms of landholding is as follows:
Crop Loan Insurance Scheme
Objective: To encourage banks to lend to small livestock farmers
Coverage: Premium up to 4% reimbursed to banks against financing of livestock (Rs. 300 million was allocated for the FY 2014-15 against 100,000 beneficiaries)
Risk covered: Death of animals due to disease, flood, heavy rains, storm or accident
Livestock Insurance Scheme for Small Borrowers
Period No of
borrowers
Amount Insured
Premium Claimed
July-Dec 2014
17,351 3,062 68
Jan-June 2015
54,976 10,352 224
Total 72,327 13,372 293
Credit Guarantee Scheme for Small & Marginalized Farmers
Objective: To encourage Banks/MFBs to provide collateral-free financing to small farmers through credit guarantee on risk sharing basis
Potential Borrowers: 400,000-500,000 farmers to benefit from this scheme. Up to 5 acres of land in canal-fed and 10 acres in rain-fed areas
Loan Size: Maximum up to Rs. 100,000/- per borrower for production (crop) loans only
Amount in Millions
Way Forward
14
Thanks!