National Rural Support Programme (NRSP) has proposed the government to increase its access to finance from commercial banks by Rs 50 to Rs 100 billion for doubling micro-credit scheme for millions of landless farmers across the country.
Chief Executive Officer (CEO) NRSP Rashid Bajwa told media here on Friday that “our credit limit from commercial banks is restricted at Rs 20 billion but there is dire need to increase it by Rs 50 to Rs 100 billion in order to ensure micro-credit for millions of landless farmers. We are not asking for any kind of subsidy but only requesting the government to increase access to finance for poorest of the poor landless farmers. If the access to finance ensured then they could reach out 40 percent poorest who were living below the poverty line.”
He said the government had to take policy decisions to facilitate landless farmers and owners of livestock- a major contributor to the agriculture-to-GDP ratio in the country. It is a matter of policy directive from the Prime Minister or Finance Minister whereby the State Bank of Pakistan (SBP) would have to give directives to commercial banks for allocating two to five percent borrowing amount for micro-credit schemes. The second option was to opening up refinance window for micro-credit by the central bank, he proposed.
Bajwa said there was nothing unusual for demanding for setting aside borrowing limit for farmers as the limit of micro-credit for small farmers in India stood at 56 percent of total extended loan amount. Responding to a query about renewal of license from Securities and Exchange Commission of Pakistan (SECP), he said NRSP was the first outfit which renewed its license from SECP under section 42 of Companies Ordinance 1984.
The NRSP was launched in 1991 in eight selected districts of four provinces during the tenure of Nawaz Sharif and now it was working in 58 districts of the country. They have disbursed one billion rupees of PM Interest-Free Loan Scheme among poorest in accordance with BISP poverty scorecard.
He said landless farmers could be rescued only by focusing upon livestock which contributed 52 percent in share of 22 percent of agriculture sector in overall GDP growth trajectory. He stated that if the livestock was focused properly it could increase exports to Dubai, UAE and other Middle Eastern countries manifold which were vying for getting Halal meat. He apprehended that if that sector was ignored for some years then it could cause unrest among poorest of the poor landless farmers.
About interest rate being charged on micro-credit, he said that it stood at 28 percent on per annum basis but reduced to 14 percent in case of repayment within 6 months period. Sharing bifurcation of interest rate, he said that the commercial banks charged 12 percent from them while their default rate stood at 3 percent and operation cost was standing at 10 percent. After incorporating delayed payment it went up to 28 percent on annual basis but it reduced to a half at the rate of 14 percent in case of paying back loan amount before period of one year.
The interest rate was lowest being charged by NRSP among all micro-credit institutions except Prime Minister Interest Free Loan Scheme and Akhuwat. He further stated that Akhuwat got 10 percent subsidy and they arranged fund raising events in order to generate money. Sharing a success story of Shagufta Shaheen, NRSP officials said that living some 30 kilometres away from Islamabad in a relatively unknown village by the name of Chirah, Shgufta Shaheen was a living example of how NRSP had been changing the lives of poor and under-privileged people hailing from the rural areas of Pakistan. Born to a poor family and then married into a joint family system, Shagufta Shaheen used to do embroidery to ease off some burden from his husband, Muhammad Khurshid, but that was not enough.
Shagufta Shaheen knocked at the doors of NRSP in 2009, and was given an initial loan of Rs 15,000. More input in her embroidery business added up to her monthly income instantly. Seeing the success of her step, Shagufta Shaheen then took second loan from NRSP to set up an embroidery training centre in village. From there, she moved only higher and higher. Step by step guidance and another loan of Rs 20,000 from NRSP allowed Shagufta Shaheen to start pickle business parallel to her embroidery business.
Now, Shagufta Shaheen is a successful businesswoman and she is no longer living below the poverty line. She has returned the loan and her children are studying in some of the best institutes in Islamabad nowadays. “Thanks to NRSP, a number of women belong to Shaheen’s Chirah Village, have set up their own small businesses and are changing their fortunes with great effect,” they added.