KARACHI: The banks failed to achieve the target set for agriculture credit for the fiscal year 2018-19 despite disbursing higher amount compared to the preceding year, data published by the State Bank of Pakistan (SBP) showed on Monday.

The SBP said the banks made disbursements of Rs1.174 trillion or 94 per cent against the ambitious target of Rs1.25tr set by Agricultural Credit Advisory Committee for 2018-19.

The agri-related disbursements in FY19 were 21pc higher than Rs972.6 billion last year. The SBP said the outstanding agri portfolio increased to Rs562.4bn by the end of June registering a growth of 20pc compared to last year’s Rs469.4bn.

According to SBP report, the agricultural credit outreach has increased to 4.01 million farmers or 91pc against target of 4.42m farmers at end June, recording growth of 8pc from 3.72m farmers at end June 2018.

The detailed credit performance reveals that during FY 2018-19, five major commercial banks collectively disbursed Rs653.5bn or 100.4pc of their annual target of Rs651bn, specialised banks disbursed Rs81.2bn or 71.8pc of their annual target of Rs113bn and fifteen domestic private banks as a group achieved 86.5pc by disbursing Rs211.9bn against their target of Rs245bn during FY2018-19.

Moreover, Microfinance Banks (MFBs) as a group achieved 98.7pc target by disbursing loans of Rs154bn to small farmers which is 23pc higher than Rs124.8bn during same period last year.

Similarly, the Microfinance Institutions and Rural Support Programs collectively achieved 97.1pc of their targets by disbursing Rs34bn to small and marginalised farmers during FY 2018-19.

Five islamic banks as a group achieved 78.8pc of their annual target of Rs50bn by disbursing Rs39.4bn which is Rs23bn higher than disbursements made during the corresponding period last year. Further, in order to mobilise the islamic windows of commercial banks for agricultural financing, the disbursement targets of Rs50bn were assigned for 2018-19.

Accordingly, the windows of commercial banks as a group disbursed Rs32.7bn or 65.4pc of the annual targets to faith sensitive clients during FY 2018-19.

The SBP said that integrated efforts by central bank, financial institutions and other stakeholders including federal and provincial governments helped achieve disbursement targets.

The efforts included rigorous follow up with the top management of banks, agriculture credit heads and conducting regular farmers’ awareness and financial literacy programs across the country. Moreover, initiation of one window operation in KPK and holding job fairs for agriculture graduates in underserved provinces were also helpful.

“The achievement of agriculture credit disbursement is a sizable performance in agriculture lending despite number of demand and supply side challenges,” said the SBP.

Published in Dawn, August 6th, 2019