Banks disburse Rs972.6bln agri credit in FY2018

KARACHI: Banks disbursed agriculture credit of Rs972.6 billion during the last fiscal year of 2017/18, falling short of Rs1 trillion target set by the Agriculture Credit Advisory Committee (ACAC), the central bank said on Thursday.

Agriculture loans in 2017/18 were 38.1 percent higher than the previous year’s disbursements of Rs704.5 billion, the State Bank of Pakistan (SBP) said. Further, the agriculture outstanding portfolio increased to Rs469.4 billion by June-end 2018 registering a growth of 15.7 percent compared with last year’s position of Rs405.8 billion.

Similarly, the agricultural credit outreach increased to 3.72 million farmers till June-end 2018, from 3.27 million farmers reached last year, recording growth of 13.8 percent.

Banks failed to achieve the FY18 agriculture credit target, however, the SBP said that the achievement of agri credit disbursement was a challenging task in the backdrop of various real side challenges like; water shortage, low production of maize and wheat, price volatility of agri produce and high cost of production.

“The SBP made concerted efforts for achieving the agri credit disbursement target and implementing various budgetary initiatives set by the government,” the SBP said in a statement. “These efforts included; provision of enabling regulatory environment for agri lending institutions, sensitising banks to adopt agri financing as a viable business proposition, exploring new avenues of financing; value chain financing, digitalisation of credit, warehouse receipt financing, and implementation of credit guarantee scheme for small and marginalised farmers etc.”

In addition, SBP has taken various initiatives for promoting agri credit, including allocation of regional targets and continuous follow up with banks for the achievement of the targets.

Further, farmer’s awareness programmes at grassroots level have also helped in improving agri credit disbursement in underserved areas.

The analysis of agri credit disbursement during 2017/18 reveals that five major banks collectively disbursed agri loans of Rs523.9 billion or 101.5 percent of their annual target of Rs516 billion which is higher by 52.9 percent from Rs342.6 billion disbursed during the previous year.

Under specialised banks category, Zarai Taraqiati Bank Limited (ZTBL) disbursed Rs83.2 billion or 66.6 percent of its annual target of Rs125 billion, while Punjab Provincial Cooperative Bank (PPCBL) disbursed Rs10.7 billion by achieving 71.5 percent against its target of Rs15 billion last year.

Fifteen domestic private banks as a group achieved 92.4 percent against the target of Rs200 billion, and five Islamic banks achieved 82 percent of their total target of Rs20 billion. Further, the performance of microfinance banks and microfinance institutions remained encouraging. Collectively, these institutions surpassed their annual targets by disbursing Rs124.8 billion and 28.7 billion respectively to small farmers in 2017/18.