KARACHI, June 23: The central bank will make 14 small private banks more involved in disbursement of agricultural loans in the next fiscal year to ensure that agriculture plays its role as a key driver to economic growth.

Under the agricultural package announced by President General Pervez Musharraf earlier this month the target for disbursement of agricultural loans has been set at Rs80 billion.

State Bank officials say 21 banks involved in mandatory agricultural loaning will disburse this amount adding that these and other banks would be free to make additional loans-if they so desire.

These officials say the central bank would shortly set the targets for agricultural loaning for individual banks adding that it would now make 14 small local private banks more involved in the process.

SBP had set Rs65.5 billion target for mandatory disbursement of agricultural loans for the current fiscal year. SBP officials say that in eleven months to May 2004 the banks involved in mandatory agricultural lending disbursed Rs61.8 billion loans- meeting 94 per cent of the target.

But the breakup of this achievement shows that five big local banks namely (i) National Bank (ii) Habib Bank (iii) United Bank (iv) Muslim Commercial Bank; and (v) Allied Bank disbursed the highest amount of Rs28.7 billion.

This was higher by Rs6.2 billion than their cumulative target of Rs22.4 billion. Executives of these banks say agricultural lending by these banks put together would cross Rs31 billion mark at the end of this fiscal year.

The Punjab Provincial Co-operative Bank lent Rs5.5 billion in eleven months to May 2004 against its target of Rs7.5 billion. The SBP sources say the bank looks set to miss the target by a big margin. But agriculturists are all praise for the bank because it is known for making much cheaper agricultural loans than other banks.

The Zarai Taraqiati (Agricultural Development) Bank Ltd. or ZTBL disbursed Rs25.4 billion in eleven months to May 2004 against its target of Rs33 billion. Obviously the bank would not be able to meet its target.

But that the slippage in the target is rooted in the fact that ZTBL was refrained by the central bank from making fresh lending. It was making agricultural loans against recoveries.

Fourteen small local private banks that disbursed only Rs2.2 billion worth of agricultural loans in eleven months to May 2004 against their target of Rs2.65 billion. They seem to miss even this small target by a short margin.

The fourteen banks are: (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.

SBP officials say that the central bank would now encourage these banks to increase their agricultural lending. As overall target for mandatory disbursement of agricultural loans has been raised from 65.5 billion in fiscal year 2003-04 to Rs80 billion for 2004-05 these banks too will also have a higher than this year's target to meet in the next year.