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July-November period: banks achieve 34 percent of agriculture credit target




  • Banks achieved 34 percent of agricultural credit disbursement target during the first five months of current fiscal year (FY13). Sources in banking sector told Business Recorder on Thursday that agricultural credit disbursement is gradually increasing and continues to post upward trend during the current fiscal year mainly due to financing demand for wheat crop. 

    “Farmers need more financing for cultivation of crops this year because of higher cost of raw material,” bankers said. They said the SBP has already adopted a long-term strategy to achieve agricultural credit disbursement target, while banks are also making all-out efforts for achieving their targets following the SBP guidelines. 

    “Swift settlement of crop loan insurance claims, One Window Operation (OWO), timely completion of revenue formalities, farmers” awareness and financial literacy programs at grass-roots level are some of the steps, which will help chase agricultural credit disbursement target for current fiscal year,” bankers said. 

    The SBP is closely monitoring the banks” performance, besides follow-up of indicative targets with the top management of banks and their agricultural heads, they added. They said induction of SME banks in the agricultural disbursement process is also a good step as they have grass-roots presence in the rural areas. In addition, Meezan Bank has also announced to provide Shariah-compliant agricultural financing by extending a Shariah-compliant financing facility in the agriculturally rich central region of Pakistan. 

    Under the financing arrangement, Meezan Bank will sell DAP, urea, pesticides and seeds to its clients on a Murabaha basis which will also significantly help achieve annual target. They said the current path of growth is better than previous years as it is being expected that at end of first half about 50 percent of the target will be achieved comfortably. 

    Sources revealed that banks achieved over 33 percent agricultural credit disbursement target during the first five months of FY13 despite slow economic activities. Against the target of Rs 315 billion, commercial, specialised and SME banks disbursed Rs 106.7 billion during July-November, 2012 or 33.8 percent of the target, set by the State Bank of Pakistan for FY13. 

    The disbursement is also 13.8 percent higher than Rs 93.7 billion disbursement during the corresponding period last year. With current disbursement, the outstanding portfolio of agricultural loan has increased to Rs 229.6 billion at end-November, 2012 compared with Rs 207.7 billion at end-November, 2011. Five large banks collectively disbursed agricultural loans of Rs 63.2 billion or 41.2 percent of their annual target, higher by 10 percent from Rs 57.5 billion disbursed during the corresponding period last year. 

    Allied Bank achieved 55 percent of its annual target while NBP, MCB, HBL and UBL achieved 43 percent, 41 percent, 39 percent and 28 percent of their individual targets, respectively. Under specialised banks category, ZTBL could disburse only Rs 11.5 billion or 16 percent of its annual target of Rs 72.0 billion while PPCBL achieved 23.4 percent of its target by disbursing Rs 2.1 billion during the period under review. 

    Fourteen domestic private banks as a group achieved 38.4 percent of its target, however, the banks including, BoK, Bank Al Habib, Silk Bank, Sindh Bank and Faysal Bank achieved 57.4 percent, 52.4 percent, 48.3 percent, 47.7 percent, 45.0 percent of their annual targets, respectively while Soneri, Bank Alfalah, Askari Bank, NIB and BOP achieved 39 percent, 32.6 percent, 25.6 percent, 25.4 percent and 25 percent of their targets, respectively. Five microfinance banks as a group disbursed agricultural loans of Rs 4.3 billion or 31 percent of their annual target of Rs 13.8 billion during the period. During the last fiscal year, ie, FY12, banks surpassed their annual targets of agricultural credit disbursement and overall disbursed loans worth Rs 293 billion against target of Rs 285 billion. 

    Copyright Business Recorder, 2013

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