Banks disburse Rs598bln loans to agriculture sector in 2015/16

KARACHI: Banks disbursed Rs598.3 billion worth of loans to the agriculture sector during the last fiscal 2015/16, up 16 percent over the preceding year, despite negative growth of the sector, the central bank said on Monday. 

The credit fell a little short of the annual target of Rs600 billion set by the Agricultural Credit Advisory Committee.  “The achievement of agri credit disbursement was an uphill task for agri lending institutions due to various financing issues and real side challenges like low production of major cash crop especially cotton, climate change, price fluctuation of agri produce, marketing linkages gaps and high risk perception of banks about agri financing, etc,” the State Bank of Pakistan (SBP) said in a statement.

Credit to the agriculture sector amounted to Rs515.9 billion in the fiscal 2014/15. The SBP said the outstanding portfolio of agriculture loans increased Rs32.3 billion to Rs345.6 billion as on end June 2016, recording 10.3 percent growth during the year. The number of farmers served by banks also increased from 2.2 million to 2.4 million.

“In addition to implementing various budgetary initiatives, the SBP made concerted efforts for achieving the agri. credit disbursement target set by government,” it said. “These efforts included provision of enabling regulatory environment, sensitising banks to adopt agri financing as a viable business line, exploring new financing avenues including agri value chain financing, warehouse receipts financing, execution of credit guarantee scheme for small and marginalised farmers and rigorous monitoring of banks’ lending performance.”

Loans were provided to crops, such as vegetables, fruits and orchards. The non-crop sector includes livestock, dairy, poultry and fisheries. The detailed review of banks’ performance revealed that five major banks collectively disbursed agri loans of Rs311.4 billion or 101.9 percent of their annual target of Rs305.7 billion, higher by 18.4 percent from Rs262.9 billion disbursed during the preceding year.

Amongst the five major banks, NBP not only surpassed its annual target by achieving 109.2 percent but also made a major contribution in overall target achievement. HBL achieved 102.4 percent, MCB 101.8 percent, UBL 100.4 percent of their respective targets; while, ABL achieved 86.9 percent of its annual target.

Under specialised banks, Zarai Taraqiati Bank Limited disbursed Rs90.97 billion or 89.2 percent of its annual target of Rs102 billion while Punjab Provincial Cooperative Bank disbursed Rs10.3 billion by achieving 82.7 percent of its target of Rs12.5 billion during FY16.

Fifteen domestic private banks as a group achieved 93.4 percent of their target. Within this group, Summit, JS bank, Bank Alfalah, Habib Metropolitan, Sindh Bank, Soneri and Bank of Khyber surpassed their annual targets. However, NIB bank achieved 94.3 percent, First Women Bank 87.5 percent, Bank Al Habib 88.5 percent, Standard Chartered 87.3 percent, Faysal 84.7 percent, Askari 83.9 percent, Silk 77.7 percent and Bank of Punjab achieved 43 percent of the annual target during the period under review.

Nine microfinance banks as a group surpassed their annual target of Rs40.1 billion by disbursing agri loans of Rs53.9 billion or 134.4 percent during FY16.  NRSP Microfinance bank, Khushhali, First Microfinance, Tameer, Mobilink Microfinance, U Microfinance, FINCA Microfinance and APNA Microfinance bank crossed their targets while Pak Oman achieved 84.4 percent of its annual target.

Five Islamic banks as a group also beat their annual targets by disbursing Rs8.5 billion against the target of Rs7.9 billion. Amongst the group, Meezan, Albaraka and Dubai Islamic Bank outdid their annual targets while BankIslami achieved 96.8 percent of its annual target, whereas, Burj Bank could achieve 40 percent of its target during FY16.