ABSTRACT
Provision and use of financial services has always been an important catalyst for sustained agricultural development. There is a huge difference between supply and demand of agriculture credit; only 39% of total demand is being met from formal sources. Formal sources of agricultural credit include the Zarai Taraqiati Bank, Punjab Provincial Cooperative Bank, commercial and domestic private banks, microfinance banks, rural support programs, NGOs, microfinance institutions, and Islamic financial institutions. Informal sources include private moneylenders, commission agents, village traders, landlords, well-to-do farmers, friends, and relatives, etc. An enabling environment, guidelines for product development, capacity building, and linkages with stakeholders are the four main pillars of the State Bank of Pakistan's regulatory framework for agriculture credit. Value Chain Contract farming financing, warehouse receipt financing, group-based lending, and agent-based financing are the few innovative lending methodologies introduced by SBP. Cooperatives have a long history. They are present since the 1800s and serving the poorest segments through credit societies, production societies, consumer societies, marketing societies, etc. Traditional cooperatives will have to find ways to adapt to the changing functional needs of the time, markets, and economies. Keeping in view the pressures of population growth, environment degradation, water scarcity, etc., many of the cooperatives may end up in failures or will have to change their structure fundamentally.
