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SBP issues guidelines for livestock financing

KARACHI (August 29 2006): The State Bank of Pakistan (SBP) on Monday issued 'Guidelines for Livestock Financing' to facilitate and encourage the banks/financial institutions in enhancing flow of credit to the livestock sector.

The 'guidelines' cover all areas of livestock financing business, including loan purpose and objectives, product development, eligibility of borrowers, delivery channels, monitoring mechanism, etc.

With the issuance of the 'guidelines', banks/financial institutions are expected to considerably enhance the flow of credit to this important sector of the economy. Banks may adopt the guidelines in their present form or with some modifications that suit their organisational needs and market characteristics.

Livestock is the largest sub-sector of agriculture, accounting for 47 percent of value-addition in the sector, and constitutes about 11 percent of GDP. The disbursement of credit to the agriculture sector has witnessed significant growth during last few years as a result of sector-friendly policies of the State Bank of Pakistan and efforts of the commercial banks.

However, the livestock sub-sector could not get due share in the substantially enhanced flow of credit to the agriculture sector.

In view of the contribution of the livestock sector to GDP, and employment creation, especially in rural areas, the SBP had established a 'Committee of Experts' to devise strategy for increasing the share of institutional finance to this sector, which has huge growth potential. In the light of the recommendations of the 'Experts Committee', and inputs from stakeholders, including banking sector and Ministry of Food and Agriculture and Livestock (Minfal), the State Bank has framed these guidelines.

The State Bank of Pakistan has asked all concerned to visit its website: www.sbp.org.pk for detailed guidelines.

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