Agri-credit increases 22pc to Rs527bln in July-December

KARACHI: Banks disbursed Rs527.3 billion in agriculture credit during the first half of 2018/19, which was 42.2 percent of the annual assigned target, and 22 percent higher than the disbursement made during the same period last year, the central bank governor said.

Governor Tariq Bajwa of the State Bank of Pakistan (SBP), however, advised banks to enhance their outreach to underserved areas and small farmers to achieve agriculture credit target of Rs1.25 trillion for the current fiscal year.

Bajwa said there are geographical disparities in provision of agriculture credit as the disbursements in Khyber Pakhtunkhwa, Balochistan and Gilgit Baltistan still remain far from their respective targets. “Despite witnessing reasonable progress during FY2019, the industry still faces various demand and supply side challenges,” Bajwa said, presiding the mid-term review meeting of Agricultural Credit Advisory Committee (ACAC) in Hyderabad.

It was the first ACAC’s meeting in Hyderabad, a statement said on Saturday. SBP governor appreciated the efforts of banks in promoting agricultural finance during the July-December period. He commended the efforts of microfinance banks and institutions in providing financing to small and marginalised farmers.

The outstanding portfolio of agriculture credit also increased to Rs521 billion by December-end from Rs442 billion last year, witnessing a growth of 17.9 percent. Moreover, the number of outstanding borrowers also increased to 3.90 million from 3.46 million, with a growth of 12.8 percent.

Banks were advised to pay special focus on production loans to small farmers. They were asked to enhance their outreach in terms of agricultural infrastructure by hiring agriculture credit officers. Banks were urged to adopt a more focused approach especially towards the underserved areas to achieve Rs1.250 trillion agriculture credit target for FY2019, while bringing a qualitative shift in agriculture financing. Bajwa said harnessing technology platforms is the way forward for enhancing agricultural productivity. “I would urge the stakeholders including banks, federal and provincial governments to harness technology platforms for enhancing agricultural productivity.” SBP governor also highlighted the efforts of Islamic banks in achieving a growth of 80 percent in disbursement during July-December. “However, their share in total disbursement still remains less than three percent in overall agriculture credit.” Bajwa urged Islamic banks and Islamic windows of banks to play an active role in expanding outreach in potential areas particularly to faith sensitive farming community.

Agriculture professionals and representatives of banks also called for various innovative initiatives in agriculture financing including adoption of land record management information system for agriculture financing in Punjab, promotion of high-value crops, development of e-platform for provision of quality agriculture inputs, and women empowerment through value chain financing for livestock/dairy in Gilgit Baltistan.