KARACHI, Sept 19: Banks disbursed about Rs18 billion loans to the farming community in the first two months of this fiscal year. Bankers involved in agricultural credit marketing said that all the 21 banks engaged in this business offered Rs17.987 billion for agricultural production and development during July-August 2005.

The government has set a full year agricultural credit target at Rs130 billion. In the last fiscal year when the economy grew by an estimated 8.4 per cent with the agricultural sector’s growth at 7.5 per cent, banks disbursed Rs108.6 billion loans among farmers.

This year Rs130 billion agricultural loans are expected to help the agriculture sector grow further and contribute to the targeted economic growth of seven per cent.

Bankers said that five major commercial banks as a group offered Rs10.153 billion to farmers during July-August 2005, against their full fiscal year target of Rs63 billion. Among them, National Bank and Habib Bank lent Rs3.380 billion and Rs3.224 billion, respectively. The two banks have got to lend Rs23 billion and Rs20 billion, respectively, to the agricultural sector during the full fiscal year. United Bank and Muslim Commercial Banks made Rs1.391 billion and Rs1.275 billion agricultural loans, respectively, in the first two months of this fiscal year. They are supposed to lend Rs8 billion and Rs7 billion during the entire fiscal year. Allied Bank, which has got to meet agricultural credit disbursement target of Rs5 billion during the current fiscal year, offered Rs882 million loans in the first two months.

Zarai Taraqiati (Agricultural Development) Bank Ltd (ZTBL) lent Rs4.356 billion and Punjab Provincial Cooperative Bank Ltd (PPCL) lent Rs1.234 billion to the growers in the first two months of the current fiscal year. They are supposed to lend Rs43 billion and Rs9 billion, respectively, during the entire year. Fourteen private commercial banks made Rs2.243 billion agricultural loans in July-August 2005 against their full fiscal year target of Rs15 billion.

These banks include Askari Commercial Bank, Bank Al-Habib, Bank Al-Falah, Bolan Bank, Faysal Bank, Metropolitan Bank, PICIC Commercial Bank, KASB Bank, Prime Commercial Bank, Saudi Pak Bank, Soneri Bank, The Bank of Khyber, The Bank of Punjab and Union Bank.

When the Agricultural Credit Advisory Committee of the State Bank, which sets annual agricultural credit target, met on July 18, agriculturists present at the meeting pointed out that banks had raised mark-up on agricultural finance and they were neglecting non-farm sub-sectors of agriculture, including poultry, fisheries and livestock. The central bank has directed all the 21 banks involved in agricultural credit disbursement to lend generously to the non-farm sector this year.

Agriculturists say that banks are now making farm loans at mark-up ranging between nine and 13 per cent. “Maximum interest rates on agricultural loans should not be more than nine per cent,” says Sindh Chamber of Agriculture Chairman Syed Qamaruzzaman Shah.

Senior bankers say as overall interest rates have been on the rise since the start of the last fiscal year in July 2004, it was not possible for them to make all types of farm loans at nine per cent.