Agricultural credit releases surge 20%

Banks gave Rs149b in loans to farmers from July-January.

KARACHI:

Agricultural credit disbursement by banks surged 20 per cent to Rs149.658 billion in the first seven months (July-January) of the current fiscal year compared to the same period last year, according to data released by the State Bank of Pakistan (SBP) on Wednesday.

In absolute terms, credit disbursement to the agricultural sector rose by Rs24.772 billion in July-January 2011-12 from total releases of Rs124.886 billion in the same period of the previous fiscal year.

Muzammil Aslam, economist at JS Global Capital Limited, said the 20 per cent growth in agricultural credit disbursement was because of the low base effect of last year. “Owing to the floods, agricultural credit remained low last year, but it is recovering this year.”

Aslam said the increase in credit releases would have its positive impact on upcoming major crops such as cotton, rice and wheat. “This is happening at a time when Pakistan has already got a few bumper crops in previous months,” he said.

Credit disbursement by five major commercial banks – Allied Bank, Habib Bank, MCB Bank, National Bank and United Bank – stood at Rs82.462 billion in July-January 2011-12 compared with Rs68.481 billion in July-January 2010-11, depicting an increase of Rs13.981 billion or 20.42 per cent.

Zarai Taraqiati Bank Limited, the largest specialised bank, disbursed Rs26.361 billion, down 0.03 per cent compared with Rs26.369 billion in the same period of previous year.

Punjab Provincial Co-operative Bank gave Rs4.980 billion in loans, up 28.49 per cent from Rs3.876 billion disbursed in the same period of previous year.

Fourteen domestic private banks loaned a combined Rs28.996 billion, higher by 10.84 per cent compared with Rs26.160 billion in the previous year.

Five microfinance banks including Khushhali Bank, NRSP Microfinance Bank, The First Microfinance Bank, Pak Oman Microfinance Bank and Tameer Microfinance Bank disbursed a total of Rs6.858 billion.

For the first time, the SBP has set an indicative farm credit target of Rs12.20 billion for microfinance banks for the current fiscal year. Overall, the agricultural credit target has been fixed at Rs285 billion for the year.

Published in The Express Tribune, February 23^rd, 2012.