to address this issue, sbp has introduced a livestock insurance scheme for borrowers to mitigate risk of loss of livestock due to disease, natural calamities & accidents. to ensure diversity of agri. financing institutions, sbp has included microfinance banks and islamic banks into the agri. indicative target scheme of sbp. the agricultural credit advisory committee ( acac ), which is the apex consultative forum for agri financing with representation from all the relevant federal & provincial departments, farming community, banks and experts, has been re - activated. the acac met on 17th february 2014 which supported my six - point agenda to boost agri financing. this includes : – launching of the 2nd round of financial innovation challenge fund ( ficf ) under the ukaid - sponsored financial inclusion program, to promote innovative techniques in agri and rural financing ( for which we have gathered today ). – further, the acac approved my proposal of upward revision in the agri credit disbursement target from rs. 360 billion to rs. 380 billion for the current year, which is 13 percent higher than the actual disbursement of rs. 336 billion in last year. bis central bankers ’ speeches – sbp is going to launch a country - wide internship program for 100 top graduates in agriculture to be funded under the adb ’ s improving access to financial services endowment fund. – banks have been assigned targets for outstanding agriculture portfolio and number of borrowers to have high impact of financing at grass roots level from the current year. – sbp has made agricultural finance a key indicator of performance of banks which will be reflected in their supervisory ratings. – and, finally a working group of acac has been formed to review the state of affairs of small farmers financing and make recommendations for improving financial access to small farmers. recognizing the economic significance of rural smes, state bank has revised the prudential regulations for sme financing to put focus on ‘ s ’ part of smes. further, following incentives for sme exporters have been introduced in the export finance scheme ( efs ). – banks will allocate at least 10 % of their efs limits for smes. – for smes availing export finance under the performance - based system, the mark - up rebate has been increased by 0. 5 percentage point. – further, to incentivize banks to provide more financing to smes their spread has been increased from 1 % to 2 %

of board members, senior management are in sync with value demonstration in actions. the board ’ s oversight over compliance function should not be limited to framing policies, and its periodic review. a bank ’ s compliance policy will not be effective unless the board of directors promotes values of honesty and integrity throughout the organisation. the board should also formulate and maintain a quality assurance and improvement program that covers all aspects of the compliance function. accountability – the bank ’ s senior management is responsible for effective adherence to the compliance policy of the bank by the management and staff ; and to for ensuring that compliance risk is minimised. culture of owning the responsibility individually and collectively by board ; clear demarcation of accountability of senior management, functional head and operational head ; role of business unit as first line of defence and role of internal audit as third level of defence in facilitating robust compliance culture are all important. communication : clarity and transparency should be promoted by making a distinction between general standards for all staff members and rules that only apply to specific groups of staff. an effective compliance culture requires continuous communication of expectations on risk and compliance and practices across the bank ; compliance awareness channels for existing and new board members, senior management and employees ; process for containing conduct risk and whistle - blower mechanism. incentive structure : an adequate incentive structure should be in - built in the bank ’ s decision making systems and processes to achieve the desired compliance culture. ex ante and forward looking : compliance is distinct from other assurance functions viz., risk management and internal audit. the focus of the compliance function should be preventive compliance. by definition, preventive compliance would assess the activities of the bank before hand and prevent non - compliant activities / transactions from being carried out. compliance should be an ex ante activity and forward looking. compliance organsiation, authority and resources : a bank should organise its compliance function and set priorities for managing its compliance risk in a way that is consistent with its own risk management strategy and structures. for instance, some banks may wish to organise their compliance function within their operational risk function, as there is a close relationship between compliance risk and certain aspects of operational risk. others may prefer to have separate compliance and operational risk functions, but establish mechanisms requiring close cooperation between the two functions on compliance matters. regardless of how the compliance function is organised within a bank, it should have sufficient authority, stature, independence, resources and access to the board. its responsibilities should be clearly specified, and its activities should be subject to periodic and