- Time to integrate full range of banking services with mainstream financial systems and markets
Specialised financial institutions in Pakistan like Zarai Tariqiati Bank Limited (ZTBL) and micro finance banks apart from focusing on credit delivery and procuring deposits of agriculturist class need to offer services which are offered by conventional banks to their clients for their varying business needs through launching various products, looking into their housing needs through easy and affordable financial products and fulfilling other requirements.
Financial institutions catering to banking needs of agriculture sector must offer credit and saving products digitally as well as manually according to varying needs of their clients. In rural areas, a package of credit products should be introduced to meet small farmers business needs and facilitate marketing of their products with full insurance cover against vastly increasing natural hazards (outcome of adverse climatic change) to business, human life and assets on payment of affordable premium/cost.
Both for farming and non-farming pursuits, credit products to be tagged to cash conversion cycle of each food and cash crop, live stock, poultry farming and fish pond, which is in full swing in rural Sindh.
By linking with concerned provincial government departments these financial institutions can facilitate (being source of logistics) procurement of agriculture products from cultivators on payment of market based prices fixed by the government.
For storage of crops and cold storage facilities, loans can be extended to self help groups/community on mutual guarantee of members for setting up storage houses with or without cold storage facilities.
Health insurance
Similarly health and life insurance covers can be arranged at affordable premium. Health insurance loan products can provide life long medical care to clients. In the past a few number of micro finance banks had launched health insurance pilot projects for which seed money was provided by donor agencies.
In this regard Central Bank’s timely guarantee to micro finance banks seeking credit lines from conventional banks and development financial institutions will facilitate launching of innovative products/services.
Housing finance through micro finance banks is yet another product, which apart from improving quality of life of clients has substantial potentials for growth of institution concerned.
Women entrepreneurship
Present Constraints on size of loan (Rs500000/) and short repayment period need to be looked into by State bank of Pakistan for revision. However present limit of Rs500000/- is sufficient for renovating or adding say, another room to a small house. It can help women clients doing home based business. In this regard recent SBP Announcement to implement Women entrepreneurship finance code for advancing the agenda of women’s entrepreneurship and their access to finance to build an inclusive and sustainable financial system, as outlined in strategic plan of 2028 will enable financial institutions to create congenial financial environment for women doing business both in rural and urban surroundings.
For inculcating saving habits and mobilising savings micro finance banks in particular need to launch saving products digitally, suited to business and life pattern of their clients and particularly need to be women friendly.
Bachat committee accounts can be introduced. This could envisage banks’ input in collecting savings of entire group (committee) at mutually agreed intervals and also paying reasonable profit on group savings for the period these are retained in the account and also deducting nominal penalty from such profits in case of delayed submission of instalment/ contribution.
Women farmers in Pakistan are most vulnerable denied access to agriculture support services due to peculiar social culture set up and restricted women mobility, they are unaware of new techniques of cultivation particularly relating to crop diversity, good quality seeds and fertilisers.
Training programmes
As such ZTBL and micro finance banks in collaboration with self-help groups and NGOs involved in financing farming and non-farming projects of small farmers particularly women need to arrange training programmes on new techniques of farming, planning and entrepreneurial/technical skills for their clients who desire to start a business. Quite a few donors are willing to finance such programmes.
Initially Micro-financing emerged as an organised financial activity for under privileged rural population in South East Asian countries particularly in Bangladesh where Grameen bank sponsored by Dr.Yunus- Nobel prize laureate and now acting president of Bangladesh had introduced the concept of lending on group guarantee basis, which was later on replicated by First Women Bank in Pakistan for financing credit needs of women farmers and women doing business in urban sector not able to offer collaterals for seeking loans.
Now it is time to integrate full range of banking services/products by these specialised financial institutions with mainstream financial systems and markets making use of digital applications.
Conventional banks also need to have effective links with farmers through internet and mobile banking to cater to their financial needs. Credit needs of non-farming businesses of rural population must also be addressed in a big way to promote micro and small businesses, which in turn will generate employment for both men and women.