ISLAMABAD: Pakistan Economy Watch (PEW) said on Thursday that banks continue to ignore agriculture sector which is keeping farmers poor and dependent on informal lenders offering costly loans.
Around 70% of the farmers are dependent on parallel financial system working in rural areas as banks avoid advancing loans to this important segment despite best efforts by SBP, said PEW’s President Dr Murtaza Mughal.
The agriculture and livestock sectors comprising 44% population and 21% share in GDP gets 6.5% of all the loans issued by the commercial banks which is insufficient to bring a change in the lives of farmers.
Dr Mughal said that ratio of default among farmers had come down to 1% from 18%, but it had not pressed the financial sector to think positively about it.
“Scarcity and difficulty in getting loans from formal sector forces majority of the farmers to pledge their produce with loan sharks who pockets all the dividends. Availability of cheap credit is the only way to accelerate development of agricultural sector and ensure food security.”
He said that the government must pay attention to agri-reforms, encourage R&D, design new products for rural population and pay attention to rising input costs to stimulate agricultural growth as major industries including textile, sugar and leather depends on rural economy.
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