Banks disbursed Rs1.2tr to agriculture sector in FY20

Agri disbursements in FY20 were 3.5pc higher than FY19 but less than the credit target of Rs1.35 trillion set by ACAC

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KARACHI: Banks disbursed Rs1,215 billion to the agriculture sector during the fiscal year 2019-20, according to a statement issued by the State Bank of Pakistan. 

“This is 3.5pc higher than the amount disbursed in the previous fiscal year but less than the credit target of Rs1,350 billion which was set by Agricultural Credit Advisory Committee (ACAC) in Peshawar in November 2019,” the statement read. 

Some factors that have constrained the growth of agriculture credit include the impact of Covid-19 pandemic, locust attack and continuing real side issues including water shortage, low production of cotton, sugarcane, low off take of fertilizers and volatility in prices of agri produce etc. 

The outstanding portfolio of agriculture credit increased to Rs581 billion at end June 2020, registering a growth of 3.3pc compared with the last year’s position of Rs562 billion. However, the number of agriculture borrowers declined from 4.01 million at end June 2019 to 3.74 million at end June 2020 due to the Covid-19 lockdown situation in the country.

The analysis of disbursement reveals that during FY20, five major commercial banks collectively disbursed agriculture loans of Rs 708.3 billion or 100.5pc of their annual target of Rs705 billion, specialized banks disbursed Rs71.1 billion or 62.9pc of their annual target of Rs113 billion and fourteen domestic private banks as a group achieved 88.7pc by disbursing Rs225.0 billion against their target of Rs253.6 billion. 

Further, the five Islamic Banks as a group achieved 76.6pc of their annual target of Rs55.0 billion by disbursing Rs42.1 billion which is 6.1pc higher than the disbursement made during the corresponding period last year. Similarly, the Islamic windows of commercial banks disbursed Rs43.5 billion or 79.2pc against the target of Rs55.0 billion in FY20 which is 33pc higher from the disbursement of Rs32.7 billion made during last year.

The agriculture credit of the microfinance sector remained relatively sluggish due to Covid-19 lockdown in the 2nd half of FY20. The Microfinance Banks (MFBs) as a group have achieved 75.7pc by disbursing agriculture loans of Rs139.3 billion to small farmers which is 9.5pc lower than the disbursement of Rs154 billion during the same period last year. 

Likewise, the microfinance institutions/rural support programmes collectively achieved 73.4pc of their targets by disbursing Rs28.9 billion which is 15pc lower than the disbursement of Rs34 billion made during the last year to small and marginalized farmers.

It is important to mention that SBP announced a comprehensive relief package in collaboration with stakeholders for relief of agriculture sector to deal with the adverse implications of the ongoing pandemic on the farming community and agriculture business in the downstream of value chains. These measures which included deferment of principal and restructuring/rescheduling of agriculture loans were initially allowed until June 30, 2020, have been extended up to 30 September 2020.  

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