Credit disbursement to agriculture sector increased to Rs 1,366 billion in Fiscal Year 2020-21, witness-ing a growth of 12 per cent over FY 2019-20, de-spite the ongoing challenges posed by Covid-19 pandemic and climate change.
The disbursement is collective effort of 49 financial institutions which managed to achieve together 91 per cent of their assigned target of Rs1,500 billion for the year, State Bank of Pakistan reported Mon-day.
The outstanding agricultural credit stood at Rs 628 billion as on end June 2021, witnessing a growth of over 8 per cent over end June 2020, complements the overall positive outlook of agriculture sector which grew at 2.77 per cent during FY21.
However, the number of agricultural credit borrow-ers witnessed a decline of 5 per cent, falling from 3.7 million in FY20 to 3.5 million in FY21, primar-ily due to limited outreach owing to ongoing pan-demic.
During FY21, the commercial banks, specialized banks and Islamic banks posted a satisfactory per-formance, by disbursing Rs 1,210 billion, against their target of
Rs 1,277 billion, thus achieving 95 per cent of their assigned disbursement target.
However, microfinance banks as a group achieved 73 per cent of their target by disbursing agricultural loans of Rs 132 billion to small farmers.
Likewise, the microfinance institutions/rural support programs collectively achieved 57 per cent of their target by disbursing Rs 23 billion to small and marginalized farmers.
SBP, together with the government and private sec-tor, made concerted efforts for the development and commercialization of the agricultural sector through provision of formal financial services.
Further, the proactive response by SBP to combat the threats posed by COVID-19 bolstered the econ-omy and resulted in a rather quick rebound in eco-nomic activities across all major sectors including agricultural.
Besides, reducing the policy rate by 625 basis points, SBP also allowed banks to offer principal deferment and restructuring of agriculture loans to help combat economic disruptions.
As of April 2021, around 2 million borrowers in the agriculture and microfinance sectors have availed the deferred principal and restructured loan option with out-standing loans amounting to Rs132 billon.
SBP’s programs and policy interventions addressed the cross-cutting issue of food security enabling regulatory environment, greater inclusion of women, and advancement in farm practices.
Further, SBP facilitated banks’ partnership with provincial Land Revenue authorities for the integra-tion and use of automated land records for loaning.