Punjab receives major share of agricultural credit, with remaining provinces receiving only a token share. Banking infrastructure in Pakistan, primarily concentrated in urban areas.
The agriculture sector in Pakistan is mostly unproductive because farmers lack the financial resources to implement the most up-to-date agricultural practices that would increase productivity. There is a big gap in equality in the disbursement of agriculture credit in the four provinces of Pakistan.
Punjab receives the major share of agricultural credit, with the remaining provinces receiving only a token share. Banking infrastructure in Pakistan is still primarily concentrated in urban areas. Considering the urban population as their key clients, the banks usually focus on opening new branches in the urban areas.
Farmers and businesses can adopt new technologies and diversify the agriculture industry thanks to easy access to credit financing. However, it has become a major issue in Pakistan due to bank documentation that is not only lengthy but also incomprehensible to illiterate or less-educated farmers.
Ghulam Rafique, a farmer, stated that it usually takes so long for loans to be approved and disbursed that farmers who rely on bank loans are unable to develop their crops because the season has passed. Disbursement of agriculture credit means credit disbursed to farmers to meet their financial needs.
“Excessive delay on the part of banks is a serious issue. The banks require lengthy documentation, making the procedure time-consuming. Bank officials do not provide detailed information to farmers. They do not guide the farmers properly about the procedure to get loans easily and repay them. They also keep ordinary farmers in the dark about the terms and conditions of loan repayment,” Ghulam Rafique explained.
Small farmers with limited mobility find it difficult to visit bank branches in urban or semi-urban areas. Because the loan process is overly complicated, farmers do not receive loans in time to make input purchases. Some farmers obtain high-interest loans, and in some cases, they are forced to sell their land to repay the loan.
The lengthy loan approval procedure at the State Bank of Pakistan and all other banks, including Zari Taraqiati Bank, must be reviewed. There is a need to make the process as simple as possible. It is critical, especially in the case of agricultural financing, because a lengthy process takes time, and many farmers miss the season due to loan disbursement delays.
Finally, illiterate or less educated farmers are unable to complete the difficult bank procedure. There is also a need to assist and finance smart farmers who use technology-based farming methods. They may eventually produce better results for the government.