Farm credit off­take

The Pak Banker - - FRONT PAGE -

Farm credit off­take has reg­is­tered healthy growth re­cently, by as much as over 40 per­cent. Banks dis­bursed close to Rs 500 bil­lion on ac­count of agri­cul­tural credit dur­ing the first seven months (July-Jan) of the fis­cal year. Ac­cord­ing to the 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 the cur­rent 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. En­cour­ag­ingly, banks have also achieved 50 per­cent of the over­all an­nual tar­get of Rs 1 tril­lion. With fresh dis­burse­ments, 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. It is a good au­gury that SBP is clos­ing mon­i­tor­ing the banks' per­for­mance, with fol­low-up of in­dica­tive tar­gets with the top man­age­ment of banks and their agri­cul­tural heads. 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 Ju­lyJan­uary of FY18. 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.

Re­mark­ably, a group of four­teen do­mes­tic pri­vate banks achieved 50 per­cent of the tar­get and dis­bursed some Rs 100.27 bil­lion in first seven months of this fis­cal year. Five Is­lamic banks 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. Eleven 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.

The farm­ing sec­tor is a very vi­tal com­po­nent of Pak­istan's econ­omy and pro­vides es­sen­tial raw ma­te­ri­als to down­stream in­dus­tries. Farm­ing is not only a prof­itable busi­ness but it also con­trib­utes sig­nif­i­cantly to the gross do­mes­tic prod­uct. 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. In this con­text, more at­ten­tion needs to be given to ex­pand­ing bank­ing and re­lated fa­cil­i­ties to meet farm­ers' credit needs.

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