Karachi, November 15, 2024 – The State Bank of Pakistan (SBP) has introduced streamlined procedures and documentation requirements for agricultural loans, aiming to simplify the process for farmers and financial institutions alike.
In a circular issued on Friday, the central bank addressed challenges faced by banks in acquiring the traditional Khasra Girdawari—a land record document crucial for processing agricultural loan applications. To alleviate these difficulties, the SBP has approved alternative methods for verifying and monitoring farming activities.
New Verification Methods
Under the revised framework, banks can now rely on the following alternatives to Khasra Girdawari:
1. Digital Survey Reports: Banks can utilize geo-fencing and remote sensing technology via satellite imagery to authenticate farming activities. These services must be sourced from reputed agri-tech companies or institutions with which banks will establish formal arrangements.
2. Bonafide Certificates: These certificates, detailing crops and cultivation status, will be issued and signed by designated bank staff to verify the farming activity.
These alternatives are expected to expedite the loan approval process and reduce the burden on farmers, especially in areas where obtaining Khasra Girdawari is challenging.
Immediate Implementation
The SBP has mandated the immediate implementation of these changes across all banks. However, other existing guidelines regarding agricultural loans remain unchanged.
Implications for Stakeholders
This move aligns with the SBP’s broader strategy to support Pakistan’s agricultural sector by enhancing access to financing. By leveraging modern technology such as satellite imagery, the central bank aims to ensure more efficient and transparent loan processing. At the same time, the introduction of Bonafide Certificates empowers banks to play a more active role in validating farming activities directly.
Support for Financial Inclusion
The new measures reflect the SBP’s ongoing commitment to financial inclusion and innovation in rural credit markets. With agriculture constituting a significant portion of Pakistan’s economy, the simplification of loan procedures is a critical step toward strengthening the sector and enabling farmers to access timely financing.
These updates mark a significant shift towards modernizing agricultural credit practices and highlight the central bank’s responsiveness to the needs of farmers and financial institutions.
