Disbursement of agricultural credit exceeds target, stands at Rs704.5b
SBP data shows outstanding portfolio increases 17.4% to Rs406b
PHOTO: REUTERS
KARACHI:
Surpassing the target, banks disbursed agricultural credit of Rs704.5 billion in fiscal year 2016-17 (FY17), up 17.8% compared to last year’s disbursement of Rs598.3 billion, according to data released by the State Bank of Pakistan (SBP).
The Agricultural Credit Advisory Committee (ACAC) had set the target of Rs700 billion for FY17.
Moreover, the agri outstanding portfolio increased to Rs406 billion by end of June, 2017 registering a hefty growth of 17.4% compared with the last year’s position of Rs346 billion.
Similarly, the agricultural credit outreach has increased to 3.27 million farmers at end June 2017 from 2.40 million farmers last year.
Move away from agriculture, Chinese economist advises
The achievement of agri credit disbursement target was an uphill task due to high risk perception of banks about agri financing and volatile prices of agri commodities etc, according to a press release.
However, the SBP continued to implement its multi-pronged strategy for achievement of agri-credit target set by the government, which included; sensitising banks to adopt agri financing as a viable business line.
This included exploring new financing products, value chain financing, warehouse receipts financing, digitalisation of credit, execution of credit guarantee scheme for small and marginalised farmers, and inclusion of microfinance institutions/rural support programs for catering the credit needs of marginalised farmers.
Further, monitoring efforts included rigorous follow-up with the top management of banks and agri credit heads and holding of regular follow-up meetings with regional management. Conducting farmers’ awareness and financial literacy programs at grass root level were also instrumental.
The detailed credit performance reveals that five major banks collectively disbursed agri loans of Rs342 billion or 101% of their annual target of Rs340 billion, which is higher by 9.9% from Rs311.4 billion disbursed during the corresponding period of last year.
Amongst the five major banks, NBP has achieved 105% of its annual target, MCB achieved 103%, HBL 101%, UBL 100.5% and ABL achieved 85.4% of individual annual targets.
Under specialised banks category, ZTBL disbursed Rs92.5 billion or 90% of its annual target of Rs102.5 billion while PPCBL has disbursed Rs10.9 billion by achieving 87% against its target of Rs12.5 billion during FY17.
15 domestic private banks, as a group, achieved 99.6% of their target. Within this group Soneri Bank, Bank of Punjab, Bank of Khyber, Bank Alfalah, Faysal Bank, JS Bank, Habib Metro, Summit and Silk Bank have surpassed their annual targets.
However, Sindh Bank achieved 94.3%, First Women Bank 90%, Bank Al Habib 84%, Askari Bank 81% and Standard Chartered could achieve 73.5% of their annual targets.
10 microfinance banks, as a group, have surpassed their annual targets of Rs60 billion by disbursing agri loans of Rs87.8 billion or 146% to small farmers during FY17.
Khushhali, NRSP Microfinance Bank, Telenor MF, First Microfinance Bank, Mobilink and U Microfinance Bank have surpassed their targets while APNA Micro Finance achieved 96%, Pak Oman 65.5% and Sindh Microfinance Bank could achieve only 39.4% of its annual target.
16 newly inducted Microfinance Institutions/Rural Support Programs collectively disbursed loans of Rs19.9 billion to small and marginalised farmers against their annual target of Rs34.3 billion. Amongst these institutions, Kashf Foundation, Sindh Rural Support Program, Damen Support Program, Agahe, Soon valley Development Program and Al Mehran Rural Development Organization have surpassed their annual targets.
Four Islamic banks, as a group, have already surpassed their annual targets by disbursing Rs12.3 billion against the target of Rs11 billion. Amongst the group, BankIslami, Meezan and Dubai Islamic have surpassed their annual targets while Albaraka Bank achieved 80% of its annual target during FY17.
The SBP has been pursuing the government’s economic development agenda and is committed to promote agriculture sector in the country. The government has already set an agricultural disbursement target of Rs1.001 trillion for FY18 and SBP has also assigned the targets to participatory institutions.
Published in The Express Tribune, July 27th, 2017.
Surpassing the target, banks disbursed agricultural credit of Rs704.5 billion in fiscal year 2016-17 (FY17), up 17.8% compared to last year’s disbursement of Rs598.3 billion, according to data released by the State Bank of Pakistan (SBP).
The Agricultural Credit Advisory Committee (ACAC) had set the target of Rs700 billion for FY17.
Moreover, the agri outstanding portfolio increased to Rs406 billion by end of June, 2017 registering a hefty growth of 17.4% compared with the last year’s position of Rs346 billion.
Similarly, the agricultural credit outreach has increased to 3.27 million farmers at end June 2017 from 2.40 million farmers last year.
Move away from agriculture, Chinese economist advises
The achievement of agri credit disbursement target was an uphill task due to high risk perception of banks about agri financing and volatile prices of agri commodities etc, according to a press release.
However, the SBP continued to implement its multi-pronged strategy for achievement of agri-credit target set by the government, which included; sensitising banks to adopt agri financing as a viable business line.
This included exploring new financing products, value chain financing, warehouse receipts financing, digitalisation of credit, execution of credit guarantee scheme for small and marginalised farmers, and inclusion of microfinance institutions/rural support programs for catering the credit needs of marginalised farmers.
Further, monitoring efforts included rigorous follow-up with the top management of banks and agri credit heads and holding of regular follow-up meetings with regional management. Conducting farmers’ awareness and financial literacy programs at grass root level were also instrumental.
The detailed credit performance reveals that five major banks collectively disbursed agri loans of Rs342 billion or 101% of their annual target of Rs340 billion, which is higher by 9.9% from Rs311.4 billion disbursed during the corresponding period of last year.
Amongst the five major banks, NBP has achieved 105% of its annual target, MCB achieved 103%, HBL 101%, UBL 100.5% and ABL achieved 85.4% of individual annual targets.
Under specialised banks category, ZTBL disbursed Rs92.5 billion or 90% of its annual target of Rs102.5 billion while PPCBL has disbursed Rs10.9 billion by achieving 87% against its target of Rs12.5 billion during FY17.
15 domestic private banks, as a group, achieved 99.6% of their target. Within this group Soneri Bank, Bank of Punjab, Bank of Khyber, Bank Alfalah, Faysal Bank, JS Bank, Habib Metro, Summit and Silk Bank have surpassed their annual targets.
However, Sindh Bank achieved 94.3%, First Women Bank 90%, Bank Al Habib 84%, Askari Bank 81% and Standard Chartered could achieve 73.5% of their annual targets.
10 microfinance banks, as a group, have surpassed their annual targets of Rs60 billion by disbursing agri loans of Rs87.8 billion or 146% to small farmers during FY17.
Khushhali, NRSP Microfinance Bank, Telenor MF, First Microfinance Bank, Mobilink and U Microfinance Bank have surpassed their targets while APNA Micro Finance achieved 96%, Pak Oman 65.5% and Sindh Microfinance Bank could achieve only 39.4% of its annual target.
16 newly inducted Microfinance Institutions/Rural Support Programs collectively disbursed loans of Rs19.9 billion to small and marginalised farmers against their annual target of Rs34.3 billion. Amongst these institutions, Kashf Foundation, Sindh Rural Support Program, Damen Support Program, Agahe, Soon valley Development Program and Al Mehran Rural Development Organization have surpassed their annual targets.
Four Islamic banks, as a group, have already surpassed their annual targets by disbursing Rs12.3 billion against the target of Rs11 billion. Amongst the group, BankIslami, Meezan and Dubai Islamic have surpassed their annual targets while Albaraka Bank achieved 80% of its annual target during FY17.
The SBP has been pursuing the government’s economic development agenda and is committed to promote agriculture sector in the country. The government has already set an agricultural disbursement target of Rs1.001 trillion for FY18 and SBP has also assigned the targets to participatory institutions.
Published in The Express Tribune, July 27th, 2017.