ISLAMABAD: Micro Finance Institutions (MFIs) urged the government to give them the status of banks, aiming at the availability of credit at the same rates as those offered to commercial banks.
This request was submitted to the Sub-Committee of the Special Committee on Agricultural Products chaired by Dr Aisha Ghaus Pasha, in the absence of Shandana Gulzar Khan.
Representatives of Micro Finance Institutions, charging more than 30 percent interest on loans, were of the view that MFIs should receive more incentives so that they can extend loans to small farmers.
The subcommittee was informed that there should be some relaxation for small farmers in paying loans and to spare them from âArteesâ, ie middlemen, who give them expensive loans. .
Jahanzeb, a representative from one of the MFIs, argued that the industry is facing losses from Covid-19 which must be offset by some sort of subsidy.
Ghanzfar of Mobilink Bank, said clients and institutions linked to Covid have so far received no kind of significant relief.
âIt has already limited the industry’s ability to go further. If the financial impact of Covid-19 is not taken into account, growth will be compromised in the years to come, âhe added.
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The industry has a number of clients and institutions that have been affected due to Covid which can be shared with the affected organization.
The Sub-Committee was further informed that climate change is affecting Pakistan and suggested that action should be taken in this regard.
MFI representatives argued that insurance coverage in crop loans is too low and suggested that there should be disaster risk insurance for the agricultural sector.
The representative of Micro Finance Bank said they have increased their loans to Rs35 billion to Rs 600 million, adding that the purpose of microfinance institutions is to strengthen small farmers and the rural economy.
The Sub-Committee was informed that there is a need to open more branches in rural areas to help small farmers who do not get short term loans because they do not have access to the facility. .
Nawab Sher, MP, said microfinance institutions charge 34 percent interest on loans, which is too high, calling for the policy to be reviewed.
The chairman of the subcommittee, Dr. Aisha Ghaus Pasha, noted that large farmers get loans at 7 percent interest while small farmers receive loans at 34 percent interest from MFIs. is not appropriate.
She argued that the National Assembly panel must work for small farmers. She said the loans should be used to increase yields, not to build houses.
The representative of Akhuwat Islamic Micro Finance said its loans have exceeded 22 billion rupees, with a share of more than 2 billion rupees from the government of Punjab, adding that loan recovery is 99.9 percent.
Copyright Business Recorder, 2021