KARACHI, July 10: Credit disbursement to agriculture sector exceeded the annual target for 2006-07 with a growth of 22.4 per cent over the previous year.

Dr Shamshad Akhtar, the governor State Bank informed the Agriculture Credit Consultative Committee on Tuesday that commercial and specialised banks had surpassed the target of credit disbursement to the agriculture sector in the fiscal year 2006-07.

Total disbursements reached Rs168.3 billion representing 22.4 per cent growth over the preceding year disbursement of Rs137.5 billion, exceeding the actual target of Rs160 billion.The big five commercial banks, namely Allied Bank Ltd., Habib Bank Ltd., MCB Bank, National Bank of Pakistan and United Bank Ltd. as a group disbursed a total of Rs80.2 billion against the full-year target of Rs80 billion.

Zarai Taraqqiati Bank Ltd. (ZTBL), Punjab Provincial Co-operative Bank Ltd. (PPCBL) and domestic private banks (DPBs) disbursed Rs56.3 billion, Rs7.9 billion and Rs23.8 billion, respectively.

For FY2007-08, the committee recommended the target of Rs200 billion for credit disbursement to farmers. This assumes combined lending of Rs132 billion by commercial banks and Rs68 billion by specialised institutions i.e. ZTBL and PPCBL.

The committee also recommended province-wise allocations of disbursements, based on the crop area and absorption capacity of each province, Azad Jammu & Kashmir and Federally Administered Tribal Areas.

During the meeting Dr Akhtar constituted committees to lay down additional ground work critical to be supportive of transformation of Pakistan’s rural development.

These committees would focus on development of agricultural database in conformity with international standards and development of a methodology for proper estimation of the agriculture and rural credit requirements of the country in conformity with the overall agricultural production as set by the respective ministries.

The committees would prepare a holistic development strategy for enhancing rural financing whereby the development programmes launched by the federal and provincial ministries would be supportive of facilitating effective intermediation of agriculture and rural credit delivery; and develop guidelines for lending technology and supportive credit enhancement mechanisms.

The SBP governor asked all stakeholders, including banks, relevant federal ministries, provincial government departments and farmers’ associations to make coordinated efforts to increase agricultural credit absorption capacity as otherwise it would be difficult for banks to meet future farm credit targets.

The committee was informed that the State Bank had developed a multi-pronged approach to double the outreach in terms of the number of borrowers and increase aggregate disbursements by banks of agricultural loans to meet up to 75 per cent of the credit requirements of the sector from the existing 45 per cent in the next 3 to 4 years.

Dr Akhtar asked the commercial banks to focus on non-farm credit, which would not only enhance their credit portfolio but would also help to generate employment in the rural areas. She stressed that banks in consultation with other stakeholders should develop new and innovative loaning products to cater to the demand of the sector.