Farm credit surges 21pc to Rs1.2trln in FY19

KARACHI: Agricultural credit surged 21 percent to Rs1.174 trillion during the last fiscal year of 2018/19, the central bank said on Monday. Bank’s agri credit disbursement, however, fell 94 percent short of the annual target set by the Agricultural Credit Advisory Committee.

The State Bank of Pakistan (SBP) said the previous fiscal year’s agricultural credit disbursement amounted to Rs972.6 billion. “The achievement of agri credit disbursement is a sizable performance in agri lending despite number of demand and supply side challenges,” the SBP said in a statement.

The agri credit’s outstanding portfolio increased to Rs562.4 billion till June-end, registering a growth of 20 percent compared with the last year’s position of Rs469.4 billion. Similarly, the agricultural credit’s outreach increased to 4.01 million farmers till June-end, recording an eight percent growth of eight percent from 3.72 million a year ago. The outreach in FY2019 was 91 percent of the annual target.

The central bank adopted a multifaceted strategy and made concerted efforts for pursuing a massive agricultural credit target, which included sensitising banks to adopt agri financing as a viable business line, exploring new avenues of financing, value chain financing, mobilising e-credit, warehousing receipt financing, implementation of crop/livestock insurance and credit guarantee schemes for the farmers.

“The achievement could be made due to the integrated efforts of federal/provincial governments, SBP, financial institutions and other stakeholders,” it said. The SBP said the efforts included rigorous follow-up with the top management of banks and agri credit heads and regular follow-up meetings with regional management were instrumental for target monitoring.

“Conducting regular farmers’ awareness and financial literacy programs across the country, initiation of one window operation in KPK (Khyber Pakhtunkhwa) and holding job fairs for agri graduates in underserved provinces were also helpful,” it added. “Moreover, the support of SBP Banking Services Corporation field offices in monitoring the district/regional targets was also supportive.”

In July-June, five banks collectively disbursed agri loans of Rs653.5 billion or 100.4 percent of their annual target of Rs651 billion, specialised banks disbursed Rs81.2 billion or 71.8 percent of their annual target of Rs113 billion and 15 domestic private banks as a group disbursed Rs211.9 billion, 86.5 percent of their target of Rs245 billion.

Microfinance banks as a group have achieved 98.7 percent of their annual target by disbursing agri loans of Rs154 billion to small farmers, which was 23 percent higher than the disbursement of Rs124.8 billion year earlier. Similarly, the microfinance institutions and rural support programs collectively achieved 97.1 percent of their annual targets by disbursing Rs34 billion to small and marginalised farmers during FY2019. In FY2019, five Islamic banks as a group achieved 78.8 percent of their annual agri credit target of Rs50 billion by disbursing Rs39.4 billion, which was Rs23 billion higher than the disbursement made a year earlier.

The Islamic windows of banks disbursed Rs32.7 billion or 65.4 percent of the annual target in FY2018/19.