Farm credit rises 17.8 percent to Rs704.5 billion in FY17

KARACHI: Bank credit to agriculture sector rose 17.8 percent during the last fiscal year of 2016-17 due to targeted measures of the central bank to boost lending to farmers, the State Bank of Pakistan (SBP) said on Wednesday.    

Banks extended Rs704.5 billion worth of agriculture loans in FY17, compared with Rs598.3 billion in the preceding year.   The SBP said banks surpassed the agriculture credit disbursement target of Rs700 billion set by the Agricultural Credit Advisory Committee (ACAC) for FY17. 

The government has already set an agricultural disbursement target of Rs1 trillion for FY18 and the SBP has also assigned the targets to participatory institutions. The agri outstanding portfolio increased to Rs405.8 billion on end June 2017, registering a hefty growth of 17.4 percent compared with last year’s position of Rs345.6 billion.

Similarly, agricultural credit outreach has increased to 3.27 million farmers at end June 2017 from 2.40 million farmers last year.

Detailed credit performance revealed that five major banks collectively disbursed agri loans of Rs342.0 billion or 100.6 percent of their annual target of Rs340.0 billion which was higher by 9.9 percent from Rs311.4 billion disbursed during last year.

Amongst the five major banks, NBP achieved 105 percent of its annual target, MCB achieved 103.2 percent, HBL 101.1 percent, UBL 100.5 percent, and ABL achieved 85.4 percent of individual annual targets, the SBP reported.

“The achievement of agri credit disbursement target was an uphill task due to high risk perception of banks about agri financing and volatile prices of agri commodities etc,” the SBP said in a statement.  

“However, SBP continued to implement its multipronged strategy for achievement of agri-credit target set by government which included; sensitising banks to adopt agri financing as a viable business line, exploring new financing products; value chain financing, warehouse receipts financing, digitalisation of credit, execution of credit guarantee scheme for small and marginalised farmers and inclusion of microfinance institutions/ rural support programmes for catering the credit needs of marginalised farmers,” it added.

It also said this achievement would have not been possible without the dynamic leadership of SBP and active support of the government. Further, monitoring efforts included rigorous follow up with the top management of banks and agri-credit heads and holding of regular follow-up meetings with regional management. Conducting farmers’ awareness and financial literacy programmes at grass root level were also instrumental.

Under specialised banks category, Zarai Taraqiati Bank Limited (ZTBL) disbursed Rs92.5 billion or 90.2 percent of its annual target of Rs102.5 billion, while Punjab Provincial Cooperative Bank  (PPCBL) disbursed Rs10.9 billion by achieving 87 percent against its target of Rs12.5 billion during FY17.

Fifteen domestic private banks, as a group, achieved 99.6 percent of their target. Within this group Soneri Bank, Bank of Punjab, Bank of Khyber, Bank Alfalah, Faysal Bank, JS Bank, Habib Metro, Summit and Silk Bank have surpassed their annual targets.

However, Sindh Bank achieved 94.3 percent, First Women Bank 90.2 percent, Bank Al Habib 84 percent, Askari Bank 81 percent, and Standard Chartered could achieve 73.5 percent of their annual targets.

Ten microfinance banks, as a group, have surpassed their annual targets of Rs60.1 billion by disbursing agri-loans of Rs87.8 billion or 146 percent to small farmers during last year.

Khushhali, NRSP Microfinance Bank, Telenor MF, First Microfinance Bank, Mobilink and U Microfinance Bank have surpassed their targets, while APNA Micro Finance achieved 96 percent, Pak Oman 65.5 percent, and Sindh Microfinance Bank could achieve only 39.4 percent of its annual target.

Sixteen newly inducted microfinance institutions/rural support programmes collectively disbursed loans of Rs19.9 billion to small and marginalised farmers against their annual target of Rs34.3 billion. Amongst these institutions, Kashf Foundation, Sindh Rural Support Programme, Damen Support Programme, Agahe, Soon Valley Development Programme, and Al Mehran Rural Development Organisation have surpassed their annual targets.

Four Islamic banks, as a group, have already surpassed their annual targets by disbursing Rs12.3 billion against the target of Rs11.0 billion. Amongst the group, BankIslami, Meezan, and Dubai Islamic have surpassed their annual targets, while Albaraka Bank achieved 80 percent of its annual target during FY 2016-17, the SBP statement said.