KARACHI March 6: The State Bank of Pakistan (SBP) has said that the five major commercial banks of the country have so far achieved around 77 percent of their annual targets for agriculture disbursement, which is around 52 percent higher than the disbursement during the same period last year.

“We are sure, that by June 30 these commercial banks would disburse substantially more than their targets,” the bank said in a summary of the effort made by the central bank for enhancing the volume of agricultural credit as well as enlarging the scope and eligibility criteria under the agriculture loans scheme over the last three years. The summary was posted at the SBP website Friday. “As regards 14 private domestic commercial banks, they have so far achieved 53 percent of their targets up to January 2004 compared to only 19 percent last year in the same period.”

The bank said the commercial banks have reduced their mark-up rates for agriculture financing, while the central bank is also providing them credit line at government T-bill rates which are around 1.6 percent to 1.8 percent per annum.

“The SBP has expanded the scope and coverage of agriculture credit to make it attractive for commercial banks to lend to the farming community,” the summary said. “The entire value chain of agriculture from inputs, equipment, machinery and implements, production, storage, marketing, transport, processing of crops, fruits, vegetables (other than major crops) to distribution, has become eligible under the supervised Agricultural Credit Scheme.”

Further, the summary said the private banks are being encouraged to get involved in extending credit to agriculture sector either directly or through syndication with other banks or through on lending to ZTBL, Rural Support Organisation and NGOs. These banks have disbursed nearly Rs 850 million in 2002-03 of their credit operations to support agriculture sector.

The central bank said as there are no facilities for on-farm or off-farm storage, godowns or silos like other countries where the farmers can deposit their produce and pay a rental, therefore, the SBP has allowed private sector to obtain financing from commercial banks for construction of such facilities.

The limit on credit against two personal securities acceptable to the banks in lieu of pass book, has also been raised from Rs 50,000 to Rs 100,000. This should help those farmers with limited excess to collateral, the report said.

The report said revolving or running finance from the banks on the basis of multiple/revolving limits for a period of three years in addition to demand finance in single disbursements are also permissible against one time documentation.

Under the said scheme, the borrower is only required to clear his account along-with up-to date mark-up on any one day in 365 days of the year at his own choice. On clearance of the account the limit will automatically be renewed without any fresh documentation, the report said.

The summary also said that the SBP has revised and updated the methodology used for estimating agriculture credit requirements, and added that more than 150 new items for activities related to agriculture have been added to this list.

The SBP has also started imparting and dissemination of knowledge to all stakeholders including commercial banks, chambers of agriculture, farmers associations, representative from tobacco board/tea board and district nazims and deputy nazims. These sorts of comprehensive training programs at Lahore, Peshawar, Quetta, Faisalabad, Sukkur and Hyderabad have widely been appreciated by all the stakeholders, the summary said.

Further, the report said that the SBP was planning to enhance the role of ACD to provide financing to rural/small industries/cottage industries and micro finance facilities through commercial banks, including the Khushhali Bank, MFIs and SME Bank. This would not only enhance the volume of agricultural credit but also increase scope and accessibility of such credit at the door steps of the farming community.

Under an ADB project, the State Bank is establishing a “Resource Centre” at NIBAF, Islamabad to impart trainings to MCOs, ACOs of all the participants banks and other stakeholders on agricultural credit, rural finance, and micro finance, the summary added. —Staff Report.

Daily Times