Banking sector meets agriculture credit target, disburses Rs588.3b

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Amanullah Khan

Karachi—During FY16, banks have made agricultural credit disbursement of Rs598.3 billion which is almost 100 per cent of the overall annual target of Rs600 billion and 16 per cent higher than the disbursement of Rs515.9 billion made during FY15. It is important to note that despite negative growth of agriculture sector due to a number of real side factors, agri financing continued its increasing momentum of the last few years. The outstanding portfolio of agri loans has also increased by Rs32.3 billion i.e. from Rs313.3 billion as on end June 2015 to Rs345.6 billion as on end June 2016, recording 10.3 per cent growth during the year. The number of farmers served by banks also increased from 2.2 million to 2.4 million.
The achievement of agri credit disbursement was an uphill task for agri lending institutions due to various financing issues and real side challenges like low production of major cash crop especially cotton, climate change, price fluctuation of agri produce, marketing linkages gaps and high risk perception of banks about agri financing, etc. In addition to implementing various budgetary initiatives, SBP made concerted efforts for achieving the agri credit disbursement target set by government.
These efforts included; provision of enabling regulatory environment, sensitizing banks to adopt agri financing as a viable business line, exploring new financing avenues including; agri value chain financing, warehouse receipts financing, execution of credit guarantee scheme for small and marginalized farmers and rigorous monitoring of banks’ lending performance. SBP was able to achieve this target through continued support of the Government and the leadership role of Governor, Ashraf Mahmood Wathra and Deputy Governor, Saeed Ahmad through conducting regular performance review meetings with banks and other stakeholders.
The Governor and Deputy Governor congratulated and thanked the CEOs/Presidents of banks on meeting their targets and encouraged them to further enhance agriculture credit in view of the sector’s contribution in economic growth, employment and exports. The detailed review of banks’ performance reveals that five major banks collectively disbursed agri loans of Rs311.4 billion or 101.9 per cent of their annual target of Rs305.7 billion which is higher by 18.4 per cent from Rs262.9 billion disbursed during the corresponding period last year.
Amongst the five major banks, NBP has not only surpassed its annual target by achieving 109.2 per cent but also made a major contribution in overall target achievement. HBL achieved 102.4per cent, MCB 101.8 per cent, UBL 100.4 per cent of their respective targets; while, ABL achieved 86.9 per cent of its annual target. Under specialized banks, ZTBL disbursed Rs90.97 billion or 89.2 per cent of its annual target of Rs102 billion while PPCBL disbursed Rs10.3 billion by achieving 82.7 per cent of its target of Rs12.5 billion during FY16. Fifteen Domestic Private Banks as a group achieved 93.4 per cent of their target. Within this group, Summit, JS bank, Bank Alfalah, Habib Metropolitan, Sindh Bank, Soneri and Bank of Khyber have surpassed their annual targets.
However, NIB bank achieved 94.3 per cent, First Women Bank 87.5 per cent, Bank Al Habib 88.5 per cent, Standard Chartered 87.3 per cent, Faysal 84.7 per cent, Askari 83.9 per cent, Silk 77.7 per cent and Bank of Punjab achieved 43 per cent of the annual target during the period under review. Nine Microfinance banks as a group surpassed their annual target of Rs40.1 billion by disbursing agri loans of Rs53.9 billion or 134.4 per cent during FY16. NRSP Microfinance bank, Khushhali, First Microfinance, Tameer, Mobilink Microfinance, U Microfinance, FINCA Microfinance and APNA Microfinance bank have surpassed their targets while Pak Oman achieved 84.4 per cent of its annual target. Five Islamic banks as a group also surpassed their annual targets by disbursing Rs8.5 billion against the target of Rs7.9 billion. Amongst the group, Meezan, Albaraka and Dubai Islamic Bank have surpassed their annual targets while Bankislami achieved 96.8 per cent of its annual target, whereas, Burj Bank could achieve 40per cent of its target during FY16.

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