May 20, 2008	Tuesday	Jamadi-ul-Awwal 14, 1429

KARACHI, May 19: Credit flows to agriculture witnessed a tremendous rise of 35 per cent during in the first 10 months (July-April) of the current fiscal year, but the sector is yet to improve its performance.

The State Bank of Pakistan said on Monday that credit disbursement to the sector went up by Rs40.75 billion to Rs157 billion in the July-April period.

The credit flows increased during the last five years, mainly because of the involvement of commercial banks, but the country is still facing shortage of wheat, pulses and other green products.

Total credit disbursement to the sector in the financial year 2003 was just Rs27.5 billion which multiplied each year as commercial banks have now greater share of credit disbursement than specialised banks, like Zarai Taraqiati Bank.

Overall credit disbursement by major commercial banks, including Allied Bank Limited, Habib Bank Limited, MCB Bank, National Bank of Pakistan and United Bank Limited, stood at Rs74.327 billion during the first 10 months of the current fiscal year compared with Rs54.597 billion during the corresponding period last year, depicting an increase of Rs19.73 billion or 36.14 per cent in absolute terms.

The Zarai Taraqiati Bank, the largest specialised bank, disbursed Rs45.773 billion during the July-April period compared with Rs38.843 billion last year, while disbursement by the Punjab Provincial Co-operative Bank Limited stood at Rs3.983 billion, compared with Rs5.464 billion last year.

Fourteen domestic private banks also loaned a combined Rs33.482 billion during the July-April period, up 87 per cent when compared with Rs17.912 billion disbursed last year.It is surprising that despite high credit growth, the nation is still facing a shortage of agriculture products and the country is compelled to import even wheat and pulses.

However, the central bank in its last annual report had indicted that loan disbursement was limited to a few large borrowers while small farmers were deprived of credit. This was the reason that yields of important crops did not increase significantly.

“It should be noted that in contrast to the increasing agriculture credit disbursement, the number of borrowers witnessed a decline for the second consecutive year in FY07,” said the SBP annual report for financial year 2007.

“This meant that the average size of agriculture loan increased and suggests that small farmers did not avail the financing facilities at the same pace as in previous years,” said the SBP.

A senior banker said that higher credit to agriculture sector also reflects rising cost of inputs, like fertiliser, pesticides and other ingredients.

The central bank has set an indicative target of Rs200 billion for the current fiscal year, up from Rs160 billion in the last fiscal year.