KARACHI: Credit disbursement by commercial and specialised banks to the agriculture sector increased 38% in the fiscal year ended June 30, 2018 despite tough challenges faced by farmers in producing key crops, the State Bank of Pakistan (SBP) said on Thursday.
Banks provided Rs972.6 billion in loans to farmers in fiscal year 2017-18 compared to Rs704.5 billion in FY17. “The achievement of agri-credit disbursement target was a challenging task in the backdrop of various real-side challenges like water shortage, low production of maize and wheat, volatility in prices of agricultural produce and a high cost of production,” the central bank said in a statement.
With the disbursement of fresh loans and retirement of previous loans, the outstanding agricultural credit portfolio stood at Rs469.4 billion as on June 30, which was 16% higher than Rs405.8 billion in FY17.
Similarly, the agricultural credit outreach expanded to 3.72 million farmers at the end of June 2018 from 3.27 million last year, a growth of 13.8%.
“SBP made concerted efforts to achieve the agri-credit disbursement target and implement various budgetary initiatives set by the government,” it said.
“These efforts included provision of an 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, implementation of a credit guarantee scheme for small and marginalised farmers, etc.”
Besides, the central bank said, it took various initiatives for promoting agri-credit which included allocation of regional targets, recruitment of agri-credit officers by organising job fairs in agricultural universities and continuous follow-up with banks for the achievement of targets.
Furthermore, farmers’ awareness programmes at grass roots level have also helped in improving agri-credit disbursement in underserved areas. Five major banks collectively disbursed Rs523.9 billion in agricultural credit. It was 101.5% of their annual target of Rs516 billion and 53% higher than the Rs342.6 billion disbursed last year.
Under the specialised banks category, Zarai Taraqiati Bank Limited (ZTBL) disbursed Rs83.2 billion or 66.6% of its annual target of Rs125 billion. Punjab Provincial Cooperative Bank Limited (PPCBL) disbursed Rs10.7 billion by achieving 71.5% of its target of Rs15 billion for the year. Fifteen domestic private banks collectively achieved 92.4% of the target of Rs200 billion and five Islamic banks achieved 82% of their target of Rs20 billion.
The performance of microfinance banks and microfinance institutions remained strong and these institutions surpassed their annual target by cumulatively disbursing Rs124.8 billion and Rs28.7 billion respectively to small farmers in FY18.