KARACHI: The number of small borrowers of bank money increased sharply in 2016-17, with the highest 36 per cent growth registered in recipients of agriculture credit, said a State Bank of Pakistan (SBP) report.

The Annual Performance Review, issued recently by the central bank, said a line of credit is being established with the help of World Bank for women and micro-enterprises.

The banks extended agricultural credit to 3.27 million farmers by June 30 compared to 2.4 million last year, an increase of over 36 per cent. A growth of 17.8pc was noted in the volume of agriculture credit during the year surpassing the Rs700 billion target. The agriculture outstanding portfolio also registered a growth of 17.4pc to Rs405.8bn as of June 30.

“This increase in the number of borrowers can be mainly attributed to inclusion of 15 microfinance institutions/rural support programmes in the SBP’s Agriculture Indicative Credit Target Scheme, as they collectively provided credit to more than 0.55 million farmers in FY17,” said the SBP report.

The second highest growth in the small borrowers was noted in the microfinance banks (MFBs) by 29.9pc to 2.209m.

The microfinance banking industry grew by 52.5pc during FY17 with its assets base reaching to Rs203.3bn and microcredit portfolio to Rs111.9bn.

“A line of credit is being established with the funding support of the Government of Pakistan under World Bank’s Financial Inclusion Infrastructure Project. It will allow MFBs to improve women and microenterprises’ access to credit,” said the SBP report.

The growth in MFBs’ deposits base also remained high at 68.3pc during the period with the aggregate deposit base reaching Rs146.5bn compared to Rs87bn. Concurrently, the number of depositors surged 71.7pc to 21.951 million in FY17 from 12.782 million last year.

A growth of 57pc (Rs62.127bn) was also registered in the gross loan (micro-credit) portfolio that increased to Rs171bn from Rs108.8bn during the preceding year. The average loan balance also increased by Rs6,703 to Rs32,868,” said the SBP report.

The microfinance sector comprises of 51 microfinance providers including 11 deposit taking MFBs licensed by the SBP and 40 non-bank microfinance providers licensed by the Securities and Exchange Commission of Pakistan.

“The sector was able to extend micro-credit services to over 5.202m low-income borrowers compared to 4.161m in the preceding year,” said the report.

The SME sector, which witnessed a 28pc growth in financing, registered 7pc growth in the number of borrowers to 176,847 in FY17 from 164,733 in 2016.The SME sector contributes 30pc to GDP, employs more than 80pc of the non-agricultural workforce, accounts for 35pc of the value added in the manufacturing industry and generates 25pc in the export earnings, said the SBP report.

Published in Dawn, November 5th, 2017