Amidst deliberations, FinMin Muhammad Aurangzeb and the Pakistan Banks’ Association (PBA) convened to delve into augmenting banks’ backing for pivotal sectors.
Presenting an array of propositions, PBA aimed to bolster the advancement and endurance of crucial sectors.
Focused on fortifying support for agriculture, small and medium enterprises (SMEs), and Digital & Technology, the dialogue underscored the banking sphere’s dedication to propelling financial inclusivity.
At the onset, the financial luminary articulated that the endeavor aimed to galvanize the entire sector to contribute to these priority sectors commensurate with their magnitude and distinctive capabilities.
While eschewing “directed lending,” collaborative benchmarks were proposed between banks and regulators to share the onus of fortifying these critical sectors voluntarily.
Aurangzeb enjoined banks to intensify their collaboration with the government in resuscitating and invigorating the economy, as per an official statement.
During the session, PBA Chairman Zafar Masud, accompanied by the Steering Committee members, proffered a comprehensive suite of recommendations to stimulate growth and sustainability in these pivotal sectors.
These proposals, crafted in consultation with the State Bank of Pakistan (SBP), aim to effectively address the sectors’ idiosyncratic challenges and underscore latent opportunities.
In the agricultural realm, recommendations included restructuring crop loan insurance schemes, invigorating agricultural cooperative banks, and upgrading provincial agricultural cooperative legislations.
Additionally, embracing technology-driven solutions to facilitate targeted subsidy dissemination through banks, akin to BISP, was mooted to foster much-needed financial inclusion.
Furthermore, banks were urged to actively support entities like the Small and Medium Enterprises Development Authority (SMEDA) and National Credit Guarantee Company Limited (NCGCL).
The finance minister was briefed on ongoing endeavors to revise SME Prudential Regulations, augment clean financing limits, and reassess regulatory retail portfolio limits to facilitate SME financing.
PBA is contemplating establishing an “SME and Agriculture Index” to target customers currently outside the formal economy while enhancing credit risk management.
Regarding Digital & Technology, PBA recommended easing retail foreign investment via digital micro sukuks/infra bonds and integrating freelancers into payment gateways.
Enhancing foreign remittance flows through dedicated online portals for overseas Pakistanis was also proposed.
Banks were encouraged to extend their technology-based products and services, currently utilized for internal operations, to external markets to bolster export flows.
Discussions also revolved around leveraging technology to document the economy, elucidating the banking sector’s role in furthering government initiatives.
The minister lauded PBA’s steering committee and task forces for their meticulous analysis and invaluable recommendations, accentuating the banking community’s pivotal role in propelling economic growth.
He urged banks to redouble their efforts in supporting priority sectors to catalyze economic development and prosperity.
Consensus was reached on the governance framework for implementing proposed recommendations by PBA, jointly with SBP and the Ministry of Finance and Revenue, under the aegis of the minister and SBP governor.
“PBA and its members are fully committed to collaborating closely with the Ministry of Finance and SBP to operationalize these recommendations, ensuring the banking sector’s effective contribution to Pakistan’s economic prosperity,” affirmed PBA Chairman Masud, concluding the meeting.