KARACHI, March 30: Banks have disbursed Rs43.16 billion farm credit in the first eight months of this fiscal year i.e. between July/February 2003/04 against the full fiscal year target of Rs65.5 billion. Thus the banking system has already achieved 66 per cent of the total farm credit disbursement target set for this fiscal year.

State Bank sources say that the bulk of this farm credit was disbursed by five major banks namely (i) National Bank (ii) Habib Bank (iii) United Bank (iv) Muslim Commercial Bank and (v) Allied Bank.

These banks combined disbursed Rs19.33 billion farm credit during July/February 2003/04 thus achieving 86 per cent of their target. They are supposed to disburse at least Rs22.4 billion to the agricultural sector under the State Bank mandatory farm credit scheme during the entire fiscal year 2004 ending in June.

The sources say that Zarai Taraqiyati Bank Ltd. (ZTBL) also disbursed Rs17.77 billion during this period thus achieving 54 per cent of its full fiscal year target of Rs33 billion.

They said that the Punjab Provincial Cooperation Bank made farm loans of Rs4.69 billion which was around 65 per cent of their full fiscal year target of Rs7.5 billion.

Fourteen local private banks disbursed agricultural credit of Rs1.37 billion only but even at this level the amount was equal to 52 per cent of their full fiscal year target of Rs2.6 billion.

The list of the banks include (i) Askari Commercial Bank (ii) Bank Al-Habib (iii) Bank Al-Falah (iv) Bolan Bank (v) Faysal Bank (vi) Metropolitan Bank (vii) PICIC Commercial Bank (viii) KASB Bank (ix) Prime Commercial Bank (x) Saudi Pak Bank (xi) Soneri Bank (xii) The Bank of Khyber (xiii) The Bank of Punjab and (xiv) Union Bank.

Central bankers say whereas disbursement of a certain amount of money in farm credit is mandatory for five major commercial banks the full year targets of other banks are indicative in nature.

They say that the Rs43.16 billion agricultural credit offered by the banks was part of the overall bank borrowing of the private sector in July/February 2003/04 which reached at Rs230 billion.

They say that the farm credit of Rs43.16 billion disbursed in eight months of this fiscal year included both short term as well as medium term loans. Short term loans are extended for a period of six to nine months for purchase of seeds/ fertilizers/pesticides and fuel for tractors etc.

Medium term loans are advanced for five to 10 years and are given for investment purposes like purchase of tractors or installation of tubewells and construction of water reservoirs etc.

Top bankers admit that at Rs43.16 billion agricultural credit disbursement was quite low as a percentage of overall private sector credit. "We could have lent more," admitted head of a large local bank citing cumbersome recovery procedure of farm loans as a reason for not-so-good disbursement.

But he shared the market perception that major banks could easily boost farm credit disbursement taking advantage of their large rural branch networks if the focus on agricultural credit marketing and develop special skills in this area. "We are going to induct 100- 150 mobile credit officers whose job would be to visit farmers and assess their credit worthiness," he said.

The SBP second quarterly report released here on Tuesday says there is enough potential for the banks to maintain what it calls a fast growing farm credit disbursement trend. The report points out that at present out of the total of 6.6 million farm owners only one million have the access to the institutional credit.

"Therefore the future growth in agricultural credit mostly depends upon the outreach of the banks and the innovations they (the banks) bring in this field," observes the report.

The report says that despite the negative impact of lower than the targeted cotton crop and the loss to poultry sector due to the bird-flu virus agriculture sector is expected to grow by 3.7-4.2 per cent. Originally 4.2 per cent growth target was projected for the agriculture sector during this fiscal year.