ISLAMABAD: The State Bank of Pakistan (SBP) has increased the indicative credit limit for banks to provide agricultural financing to farmers to align the financing amount with agricultural input requirements.
An increase in the indicative credit limit for production and development lending in both the agricultural and non-agricultural sectors will directly benefit agricultural borrowers, who will now be able to access more credit from banks, thereby increasing agricultural productivity by making the most of their inputs.
It will also allow banks to align loan amounts with farmers’ actual needs, thereby increasing the liquidity of agricultural credit, SBP said in a press statement on Wednesday.
Notably, indicative credit lines serve as a guide for banks to assess the credit requirements of agricultural borrowers when approving credit lines.
However, banks may adjust based on current market conditions, local input prices and the borrower’s ability to repay.
The revised indicative credit lines will also help provincial planning departments estimate total fiscal and credit needs for the agricultural and non-agricultural sectors in each province/territory.