LAHORE: Federal Minister for Finance and Revenue Mohammad Aurangzeb has termed the banking sector`s recommendations for three priority sectors small and medium enterprises (SMEs), digital and technology, agriculture vital for promoting growth and sustainability.

In a meeting with a delegation of the Pakistan Banks` Association (PBA), the minister stated that the purpose of this initiative was to encourage the entire sector to contribute to these priority sectors according to their size, unique offerings, and strengths.

While there will be no `directed lending, there shall be voluntary targets set between the banks and the regulator to share the responsibility of contributing to these critical sectors.

`I expect that the banks will continue to work with the government in the revival and growth of the economy,` he hoped.

Key recommendations in the agriculture sector included restructuring crop loan insurance schemes to integrate crop yield factors, revitalising agricultural cooperative banks,andupgradingprovincialagricultural cooperative legislation to facilitate the creation of agricultural cooperative lending institutions.

The recommendations also included exploring technology-driven solutions to facilitate the distribution of targeted subsidies through banks, particularly to subsistence-level farmers, similar to Benazir Income Support Programme (BISP), to promote much-needed financial inclusion.

The meeting focused on enhancing support by the banks for the three key sectors agriculture, SMEs, and digital and technology in Pakistan. The discussion under-lined the banking sector`s commitment to fostering financial inclusion in the country.

During the session, PBA Chairman Zafar Masud, along with the steering committee members on these initiatives, presented a comprehensive set of recommendations. The proposals were developed in close consultation with the State Bank of Pakistan (SBP) to ensure they effectively address the unique challenges and highlight the opportunities within each sector.

Similarly, it was resolved that banks actively provide financial and management support to entities such as the Small and Medium Enterprises Development Authority (SMEDA) and National Credit Guarantee Company Limited (NCGCL).

The minister was apprised that PBA and SBP were actively engaged in revising SME Prudential Regulations, enhancing clean financing limits, and reviewing regulatory retail portfolio limits to facilitate SME financing.

He was also informed that PBA was con-templating establishing an `SME and Agriculture Index` to target customers currently outside the documented economy, besides enhancing credit risk management.

On the digital and technology front, the PBA recommended facilitating retail foreign investment through digital micro sukuks/ infra bonds and integratingfreelancers into payment gateways. It was proposed to enhance foreign remittance flows via specially developed online portals for overseas Pakistanis. It was emphasised that banks be allowed to offer products and services in the technology space, currently only used for their own operations, to the outside world to harnessexportnows.

The recommendations related to the documentation of the economy through the use of technology were also discussed, outlining the role that banks would play in furthering government`s efforts in this respect.

Mr Aurangzeb commended PBA`s steering committee and the respective task forces for the three identified priority sectors for their thorough analysis and valuable recommendations. He highlighted the crucial role of the banking community in driving economic growth and stressed the importance of banks enhancing their efforts to support these priority sectors to foster economic development and prosperity.

The minister consented to the governance structure for implementing the proposed recommendations by PBA, jointly with SBP and the Ministry of Finance and Revenue, spearheaded by him and the SBP governor.

`PBA and its members are f ully committed to working closely with the Ministry of Finance and the SBP to implement these recommendations, ensuring the effective contribution of the banking sector to Pakistan`s economic prosperity,` the PBA chairman vowed, while spealcing on the occasion.