ECC urges SBP to notify risk coverage scheme

MUSHTAQ GHUMMAN

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has urged the State Bank of Pakistan (SBP) to notify approved risk coverage scheme for small farmers and underserved areas as currently their share is far less than the large farmers, sources told Business Recorder.

Last week, the Finance Division briefed the ECC that to improve the access of small farmers to agricultural credit, particularly those operating in remote and underserved regions, a Risk Coverage Scheme for small Farmers and underserved areas was developed by the State Bank of Pakistan (SBP). The scheme was presented to ECC on June 27, 2025.

The Finance Division informed that the ECC had approved the scheme with the direction to “review the restriction imposed with respect to Punjab and Sindh, in the eligibility criteria of the proposed scheme” and “that SBP should arrange a separate briefing on this proposal to ECC in the next meeting.”

Accordingly, the SBP gave a presentation to the ECC, stating that currently 97 percent of the agri-credit disbursements are made in Punjab and Sindh and the remaining 3 percent in unserved and underserved areas of Khyber Pakhtunkhwa, Balochistan, Azad Jammu & Kashmir and Gilgit-Baltistan.

In terms of agricultural borrowers, large farmers, who constitute only 7 percent of the total borrowers, received 68 percent of the total disbursements, whereas small famers (ranging landholding of up to 12.5 acres), who make 93% of the total borrowers, received 32 percent of the total disbursements. Thus, the unserved and underserved areas and small farmers (over 85 percent of the total farms) have extremely low share in the disbursements. The said scheme has been designed to incentivise banks and financial institutions to lend in underserved areas and to small farmers. The scheme would provide coverage to the small and subsistence farmers in Punjab and Sindh, whereas all farmers in Khyber Pakhtunkhwa, Balochistan, Azad Jammu & Kashmir and Gilgit-Baltistan will be covered due to their extremely low share in the current agri-credit disbursements. The scheme is expected to add over 750,000 new borrowers in next 3 years. After brief discussion on the proposal, the ECC approved risk coverage scheme for small farmers and underserved areas and directed the SBP to notify the scheme without any further delay.