PUNJAB’S interest-free loan package, which started with much fanfare last October, seems to have run into serious problems.

The loan disbursement has been meagre compared to the targets. An amount of Rs100bn was to be disbursed among 600,000 famers during the rabi season.

With the rabi (read wheat crop) season now almost over, only Rs2.75bn have been received by 22,000 farmers. It makes less than 3pc of the loan target and just over 3pc of beneficiaries. Both figures sound pathetic.

Some bankers think that the targets including extending loans to 600,000 farmers was too ambitious. In the last 10 years, the entire banking system has issued less than 1m production loans — excluding industrial and value-addition loans

The farmer registration data, however, gives some hope. Before getting loans, every farmer was supposed to get registered with the concerned department. Some 221,000 farmers, or just over 30pc of the target, have got themselves registered and may avail the loan this kharif. If that happens, the loan package may earn some respectability in the eyes of stakeholders.

While admitting that the loan and delivery process at a snail’s pace can threaten the initiative, relevant officials pin their hopes on the registration data. They believe that first season of a five-year plan was bound to have teething problems, and it did.

Counting the initial problems, they say that the Land Record Management and Information System (LRMIS), which was supposed to be the basis of the whole loan delivery system, became the biggest snag.

In some districts, the record was not updated to stand banking scrutiny. In other cases, the processing officer had not been posted yet.

The banking rules and regulations came next. The banks were not geared to the kind of digitisation that the LRMIS had created as collateral The rules needed to be changed. To make things more difficult the authority for loan processing was centralised.

Since 70pc of the applicants were supposed to be new borrowers, checking the collateral took more time.

The official processes are cumbersome. The Akhuwat Foundation, which was enlisted to grant loans to landless people in rural areas, got a revolving fund of Rs2bn after three months, when half of rabi season was over.

Apart from these initial difficulties, some of the bankers think that targets were too ambitious. Take the example of 600,000 farmers. In the last 10 years, the entire banking system has issued less than 1m production loans — excluding industrial and value-addition loans.

Expecting the government departments to achieve 60pc of it (what the professional bankers did in a decade) was asking for too much. In this loaning process, only two banks (the National Bank of Pakistan and the Bank of Punjab) were involved and both had not developed, wherewithal to process such huge numbers of small loans in such a short period of time.

Historically, out of 5.5m farming families in the province, only 1.5m have been involved in dealing with banks.

However, some analysts think that there was nothing to worry about and the situation is bound to improve. Firstly, the government is committed to make sure that this scheme does not fail.

The chief minister directed everyone involved to keep him in the loop, and he was kept updated. When he saw things getting out of hands, he himself presided over a meeting in the second week of February and everyone guilty of any laxity was taken to task.

The LRMIS was told to fill seats where needed, the provincial bank was told to hire or spare manpower and the package managers told to speed up registration process for the next kharif.

Secondly, this kharif and next rabi would be last sowing seasons before the next general elections. The Punjab government would naturally be more sensitive to this package because it was an important initiative which caters to the farmers’l needs.

Some other initiatives like Farm to Market Roads and Saf Pani (clear water) have faced their own problems. The last thing this government can afford is failure, or even, slowing down of this initiative. With all bottlenecks now identified, the government is expected to go whole hog for removing them.

Published in Dawn, Business & Finance weekly, February 20th, 2017