KARACHI: Banks disbursed Rs598.3 billion in agriculture credit in fiscal year 2015-16, which was 16% higher than disbursement of Rs515.9 billion in 2014-15 and almost met the annual target of Rs600 billion, announced the State Bank of Pakistan (SBP) on Monday.
“It is important to note that despite negative growth of the agriculture sector due to a number of factors, agri-financing continued its increasing momentum of the past few years,” the SBP said in a press release.
Outstanding portfolio of agriculture loans also rose by Rs32.3 billion to Rs345.6 billion at the end of June 2016, recording a 10.3% growth compared to the previous year. The number of farmers served by banks also increased from 2.2 million to 2.4 million.
“The achievement of agri-credit disbursement target was an uphill task for the lending institutions due to various financing issues and real-side challenges like low production of major cash crops especially cotton, climate change, fluctuation in prices of agri-produce, gap in market linkages and high risk perception of banks about agri-financing,” the central bank commented.
In addition to implementing various budgetary initiatives, the SBP said it made concerted efforts to achieve the agri-credit disbursement target set by the government.
These efforts included provision of an enabling regulatory environment, sensitising banks to adopt agri-financing as a viable business line and exploring new financing avenues such as agriculture value-chain financing, warehouse receipt financing, execution of credit guarantee scheme for small and marginalised farmers and rigorous monitoring of bank lending performance.
Five major banks collectively disbursed agri-loans of Rs311.4 billion or 101.9% of their annual target of Rs305.7 billion, which was higher by 18.4% from the Rs262.9 billion disbursed in the previous year.
Amongst these banks, National Bank of Pakistan surpassed its annual target and reached 109.2%, Habib Bank Limited achieved 102.4% target, MCB Bank 101.8%, United Bank Limited 100.4% and Allied Bank Limited 86.9%.
Among specialised banks, Zarai Taraqiati Bank Limited disbursed Rs90.97 billion or 89.2% of its annual target of Rs102 billion while Punjab Provincial Cooperative Bank Limited disbursed Rs10.3 billion or 82.7% of its target of Rs12.5 billion.
Fifteen domestic private banks cumulatively achieved 93.4% of their target. Of these, Summit Bank, JS Bank, Bank Alfalah, Habib Metropolitan, Sindh Bank, Soneri Bank and Bank of Khyber surpassed their annual targets.
However, NIB Bank achieved 94.3% of the target, Bank AL Habib 88.5%, First Women Bank 87.5%, Standard Chartered 87.3%, Faysal Bank 84.7%, Askari Bank 83.9% and The Bank of Punjab 43%.
Nine microfinance banks as a group surpassed their annual target of Rs40.1 billion by disbursing agri-loans of Rs53.9 billion or 134.4% during FY16.
Five Islamic banks as a group also surpassed their annual target by disbursing Rs8.5 billion against the target of Rs7.9 billion.
In the group, Meezan Bank, Albaraka Bank and Dubai Islamic Bank surpassed their annual targets whereas Bank Islami reached 96.8%.