Banks disbursed Rs1.2tr to agri sector in FY20

Banks disbursed Rs1,215 billion to the agriculture sector in fiscal year 2019-20, which was 3.5% higher than the previous fiscal year but was less than the target of Rs1,350 billion set by the Agricultural Credit Advisory Committee (ACAC) in November 2019.

"The factors which have constrained the growth of agricultural credit include the impact of Covid-19 pandemic, locust attack and continuing real side issues including water shortage, low production of cotton and sugarcane, low offtake of fertilisers and volatility in prices of agricultural produce," said the State Bank of Pakistan (SBP) in a statement issued.

The outstanding portfolio of agricultural credit increased to Rs581 billion in late June 2020, registering a growth of 3.3% compared with previous year's level of Rs562 billion.

However, the number of agricultural borrowers declined from 4.01 million in June 2019 to 3.74 million by the end of June 2020 due to the Covid-19 lockdown situation in the country, it said.

The statement added that the analysis of disbursement revealed that during FY20, five major commercial banks collectively disbursed agricultural loans of Rs708.3 billion or 100.5% of their annual target of Rs705 billion.

However, specialised banks disbursed Rs71.1 billion or 62.9% of their annual target of Rs113 billion and 14 domestic private banks, as a group, achieved 88.7% of the target by disbursing Rs225 billion against their target of Rs253.6 billion.

Five Islamic banks, as a group, achieved 76.6% of their annual target of Rs55 billion by disbursing Rs42.1 billion, which was 6.1% higher than the disbursement made in the previous year. Similarly, the Islamic windows of commercial banks disbursed Rs43.5 billion, or 79.2%, against the target of Rs55 billion for FY20, which was 33% higher from the disbursement of Rs32.7 billion made last year, it added.

The agricultural credit disbursement by the microfinance sector remained relatively sluggish due to the lockdown imposed to contain the spread of Covid-19 in the second half of FY20.

Microfinance banks (MFBs), as a group, achieved 75.7% of the target by disbursing agricultural loans of Rs139.3 billion to small farmers, which were 9.5% lower than the disbursement of Rs154 billion in the previous year.

Likewise, the microfinance institutions/rural support programmes collectively achieved 73.4% of their target by disbursing Rs28.9 billion, which was 15% lower than the disbursement of Rs34 billion made last year to the small and marginalised farmers.

The central bank had earlier announced a relief package in collaboration with different stakeholders for the agriculture sector to deal with adverse implications of the pandemic for the farming community and agricultural businesses in the downstream value chains.

At the moment, he said most of the employers paid their contributions manually by downloading PR-03 form. The manual submission of contributions undermined the efforts of EOBI in achieving the revenue collection target, he added.

To a query, he said out of 31,000 active employers, only 10 per cent had been using the Inter-bank Fund Transfer facility.

Highlighting the propensioners initiatives, he said the efforts were afoot to ensure provision of pension to old and bed-ridden pensioners at their doorsteps by September 1. A Memorandum of Understanding had been signed with Bank Al-Falah for the purpose.