*ISLAMABAD – The Pakistani government is launching yet another incentivescheme for higher growth rates in targeted sectors.*
*Government will offer commercial and microfinance banks tax benefits onincome they earn from one of its priority areas, reveals a policy documenton the National Financial Inclusion Strategy for the next five years.*
Financial institutions will be charged 20% in tax instead of the highercurrent rate of 34% if they give loans to encourage growth in thesepriority sectors: agriculture (small farmers), small-and-mediumenterprises, and low-cost housing.
Commercial banks have been severely criticized for heavily investing ingovernment securities instead of offering loans to the private sector,which helps an economy grow.
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To achieve sustainable and inclusive economic growth, access to finance isconsidered critical, the government says. For its five-year term, thegovernment has set a target of Rs1800 billion in agriculture loans. Thegovernment plans to include loans to 700,000 SMEs to ensure the sectorconstitutes 17% of total credit to the private sector.
