Agri loans

The Pak Banker - - FRONT PAGE -

There has been an en­cour­ag­ing growth in agri­cul­tural loans. With a 42 per­cent hefty in­crease, banks dis­bursed close to Rs 500 bil­lion on ac­count of agri­cul­tural credit dur­ing the first seven months (July-Jan) of this fis­cal year. Ac­cord­ing to State Bank of Pak­istan, com­mer­cial banks, spe­cial­ized banks, Is­lamic banks, do­mes­tic pri­vate banks, mi­cro­fi­nance banks and mi­cro­fi­nance in­sti­tu­tions have cu­mu­la­tively dis­bursed some Rs 499.645 bil­lion dur­ing July-Jan­uary of this fis­cal year com­pared to Rs 351.358 bil­lion in the same pe­riod of last fis­cal year (FY17), de­pict­ing an in­crease of Rs 148.287 bil­lion. This year the State Bank has set an all-time high tar­get of Rs one tril­lion of credit dis­burse­ment for FY18 com­pared to Rs 700 bil­lion for FY17. The set tar­get is some 43 per­cent higher than pre­vi­ous year.

In ad­di­tion, with this dis­burse­ment, banks have achieved 50 per­cent of the over­all an­nual tar­get of Rs 1 tril­lion. With fresh dis­burse­ment, the out­stand­ing port­fo­lio of agri loan also in­creased to Rs 444.465 bil­lion by the end of Jan­uary 2018 com­pared to Rs 367.547 bil­lion at the end of Jan­uary 2017. Ex­perts say that af­ford­able bank credit along with bet­ter avail­abil­ity of ba­sic in­puts such as fer­til­izer, seeds, pes­ti­cides and gov­ern­ment sup­port prices would pro­vide the needed sup­port to agri­cul­tural sec­tor, par­tic­u­larly Rabi crop. The SBP has al­ready adopted a long-term strat­egy to dis­burse max­i­mum amount un­der the agri credit to fa­cil­i­tate farm­ers, while banks are also mak­ing all-out ef­forts for their tar­gets fol­low­ing the SBP's guide­lines.

The SBP is clos­ing mon­i­tor­ing the banks' per­for­mance, be­sides fol­low-up of in­dica­tive tar­gets with the top man­age­ment of banks and their agri­cul­tural heads to achieve Rs 1 tril­lion tar­get this year. A de­tailed anal­y­sis shows that in ad­di­tion to tra­di­tional for­mal chan­nels, dis­burse­ments through mi­cro­fi­nance banks and in­sti­tu­tions are also pick­ing up pace. Five large banks col­lec­tively dis­bursed agri loans of Rs 255.209 bil­lion or 49 per­cent of their an­nual tar­get in July-Jan­uary of FY18. The dis­bursed amount is some 44 per­cent higher than Rs 177.711 bil­lion dis­burse­ment made dur­ing the cor­re­spond­ing pe­riod last year. Un­der spe­cial­ized banks, ZTBL dis­bursed Rs 42.569 bil­lion (34 per­cent of its an­nual tar­get) and PPCBL achieved 37 per­cent of its tar­get by dis­burs­ing Rs 5.616 bil­lion dur­ing the pe­riod un­der re­view.

Four­teen do­mes­tic pri­vate banks as a group achieved 50 per­cent of the tar­get and dis­bursed some Rs 100.27 bil­lion in first seven months of this fis­cal year. Five Is­lamic banks as a group dis­bursed agri loans of Rs 8.745 bil­lion or 43.73 per­cent of their an­nual tar­get of Rs 20 bil­lion dur­ing the pe­riod un­der re­view. Some 11 mi­cro­fi­nance banks dis­bursed Rs 71.08 bil­lion and achieved 71 per­cent of an­nual tar­get of Rs 100 bil­lion. Mi­cro­fi­nance In­sti­tu­tions achieved 64 per­cent of the tar­get with Rs 16 bil­lion agri credit dis­burse­ment.

Farm­ing is not only a prof­itable busi­ness with huge cash flows but it also con­trib­utes sig­nif­i­cantly to the gross do­mes­tic prod­uct. This sec­tor is a very vi­tal com­po­nent of Pak­istan's econ­omy and pro­vides es­sen­tial raw ma­te­ri­als to down­stream in­dus­tries in most of the cases. The sec­tor also con­trib­utes about 20 per­cent to the coun­try's GDP and re­mains by far the largest em­ployer ab­sorb­ing over 42 per­cent of the coun­try's to­tal labour force. Keep­ing in view the im­por­tance of this sec­tor in Pak­istan's econ­omy, the gov­ern­ment has lately been fo­cus­ing on im­prov­ing agri­cul­tural pro­duc­tiv­ity by sys­tem­atic ap­pli­ca­tion of bet­ter in­puts and ad­vance tech­nol­ogy, etc, which is not pos­si­ble with­out ad­e­quate pro­vi­sion of credit to the agri­cul­tur­ists who gen­er­ally do not have enough re­sources of their own to buy seeds, agri­cul­tural im­ple­ments, etc. It is good that farm­ers' credit needs are now be­ing met sys­tem­at­i­cally.

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