According to the Pakistan’s Agricultural Credit Advisory Committee (ACAC) Banks disbursed agricultural credit of Rs704.5 billion in 2016-17, exceeding the annual target of Rs700bn.
The State Bank of Pakistan (SBP) issued on 26th July, a report about the banks’ performance in the agriculture sector. Agricultural credit in 2016-17 was 17.8 per cent higher than the disbursement in the preceding year. According to the report the agricultural credit outreach increased to 3.27 million farmers from 2.4m farmers last year.
Five major banks collectively disbursed agricultural loans of Rs342bn, which was 100.6pc of their annual target of Rs340bn. Their disbursement was 9.9pc higher than Rs311.4bn disbursed a year ago.
Amongst the five major banks, National Bank achieved 105pc of its annual target, MCB Bank 103.2pc, Habib Bank 101pc, United Bank 100.5pc and Allied Bank 85.4pc.
Under the category of specialised banks, Zarai Taraqiati Bank disbursed Rs92.5bn or 90.2pc of its annual target of Rs102.5bn in 2016-17.
Fifteen domestic private banks achieved as a group 99.6pc of their annual target. Within this group, Soneri Bank, Bank of Punjab, Bank of Khyber, Bank Alfalah, Faysal Bank, JS Bank, Habib Metro Bank, Summit Bank and Silk Bank surpassed their annual targets.
Ten microfinance banks surpassed as a group their annual target of Rs60.1bn by disbursing agricultural loans of Rs87.8bn.
Four Islamic banks as a group surpassed their annual target by disbursing Rs12.3bn against the target of Rs11bn.
Informal credit
No comprehensive data are available on the amount of credit advanced by informal credit sources. As such it is difficult to find solid evidence regarding the relative share of these sources in the total credit supply. However, few reports and some other rough estimates show that the formal credit sources have been able to meet only 50 percent of the total credit requirements of the farm sector in Pakistan and it may be assumed that the rest are met by informal sources of credit. These sources play a vital role in Pakistan’s rural economy, especially for meeting the consumption requirements of thousands of small farmers along with fulfilling the need for irrigation water, hiring of farm power, cost of fuel etc. Mark-up tends to vary from product to product and also by type of borrower as well as lender. On the average, the mark-up is estimated to be 25 percent. In the case of fertilizer it is 29 percent while for the pesticides it comes around 35 percent.