March 22, 2006	Wednesday	Safar 21, 1427

KARACHI, March 21: All twenty-one banks involved in agricultural lending offered Rs81 billion loans to farmers in first eight months of this fiscal year, up 24 per cent from a year-ago, senior bankers told Dawn. During the last fiscal year, these banks had lent Rs108 billion to the agricultural sector, exceeding the target of Rs85 billion by a wide margin.

For the current fiscal year, the overall agricultural lending target is Rs130 billion and Rs81 billion lending in eight months means the banks have met 62 per cent of the target. At the end of the year the banks might miss the target, though not by a big margin, due to slower-than-expected credit distribution by two specialized banks.

Between July-Feb 2005-06, Zarai Tarraqiati (Agricultural Development) Bank (ZTBL) disbursed Rs25.7 billion farm credit thus meeting 60 per cent of its full year target of Rs43 billion. The Punjab Provincial Cooperative Bank (PPCB) made Rs4 billion agricultural loans during this period to meet only 44 per cent of its full fiscal year target of Rs9 billion.

Fourteen other commercial banks offered Rs9 billion agricultural loans in eight months to Feb 2006, thus meeting 60 per cent of their full fiscal year target of Rs15 billion.

The list of the banks include Askari Commercial Bank, Bank Al-Habib, Bank Alfalah, Bolan Bank, Faysal Bank, Metropolitan Bank, PICIC Commercial Bank, KASB Bank, Prime Commercial Bank, Saudi Pak Commercial Bank, Soneri Bank, The Bank of Khyber, The Bank of Punjab and Union Bank. Whereas some of these banks made very aggressive agricultural lending, the others seem to have lagged behind.

The bank-wise agricultural lending data up to Feb 2006 are not available. But, July-Dec 2005 statistics reveal that KASB Bank and Saudi Pak Commercial Bank disbursed agricultural loans worth Rs1.2 million and Rs12.3 million respectively, thus meeting only 1.2 per cent and 4.9 per cent of their full fiscal year targets of Rs100 million and Rs250 million, respectively. Obviously, these banks may not be able to meet their targets. On the other hand, Faysal Bank and Metropolitan Bank exceeded their full year targets of Rs425 million and 125 million, respectively within the first half of the year.

There is a need for boosting agricultural lending across the board because availability of bank finance at reasonable rates plays an important role in the growth of agricultural sector. Agriculturists say banks are currently charging up to 13 per cent mark up but bankers say they lend to the farmers at varying rates ranging between 9-13 per cent depending upon the type of the borrowers.

Banks flushed with excess liquidity and having a vast network of branches scattered across rural Pakistan have started to lend more to the agricultural sector and are making huge profits in the business. But the banks, that do not have enough presence in the rural areas or lack expertise in agricultural lending, continue to ignore this avenue of credit employment.

Currently banks lend more for crop raising and very least for such important sub-sectors of the rural economy like forestry, livestock, fisheries, dairy farming and poultry. A shift in this trend is needed to help the agricultural sector grow faster and achieve growth across the board. Between July ’05 and Feb ’06, all twenty-one banks involved in agricultural lending, lent Rs53 billion to the farm sector i.e. for raising crops and for purchase of inputs and farm machinery etc. But, to non-farm sector they lent only Rs9 billion.

Within the non-farm sector, livestock, dairy farming and poultry received in excess of Rs2 billion each; fisheries got Rs327 million; and forestry only Rs78,000.