KARACHI, Sept 20: All the banks involved in disbursement of mandatory agricultural credit lent Rs14.36 billion to growers in the first two months of this fiscal year against the full year target of Rs85 billion. In the last fiscal year (July-June 2003-04), these banks had disbursed Rs73.6 billion farm credit.

Bankers say that Zarai Taraqiati (Agricultural Development) Bank Ltd or ZTBL made Rs4.269 billion farm loans in July-August 2004 against its full fiscal year target of Rs34 billion.

Among five major commercial banks, NBP made the largest farm loans of Rs2.824 billion during this period, followed by Habib Bank Rs2.458 billion; Muslim Commercial Bank Rs1.018 billion; United Bank Rs832 million and Allied Bank Rs194 billion.

The targets set for the commercial banks for this fiscal year is Rs15 billion for NBP; Rs10 billion for HBL; Rs5 billion each for MCB and UBL and Rs3 billion for ABL.

So, all the five major commercial banks are supposed to lend Rs38 billion to the farm sector during the current fiscal year. In the first two months, they have lent Rs7.326 billion. This pace of disbursement shows they would not only meet the target, but even surpass it.

The Punjab Provincial Co-operative Bank also disbursed Rs1.57 billion agricultural loans in July-August 2004 against its full fiscal year target of Rs8 billion and 14 local private banks disbursed Rs1.196 billion against the target of Rs5 billion.

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

Growers are getting farm loans at a maximum 9 per cent mark-up from all the banks involved in disbursement of farm credit including ZTBL that slashed its mark-up from 14 to 9 per cent to make larger loans in the farming community. ZTBL is making farm loans out of the amount it recovers from the outstanding loans and a disbursement of Rs4.269 billion in two months shows it is making enough recoveries.

Banks are making big farm loans because they have enough surplus liquidity and that the return on farm loans at 9 per cent is much higher than the average lending rate of 5 per cent.

The Rs85 billion target set for agricultural credit is part of the Rs200 billion target set for the entire private sector during this fiscal year. But this is just an indicative target and the central bank does encourage banks to meet the entire borrowing demand of the private sector.

In the last fiscal year, banks had lent a little more than Rs300 billion to the private sector. Senior bankers say credit off-take during this fiscal year may also cross the targeted level of Rs200 billion. Figures for disbursement of credit to the entire private sector are yet to start pouring in. But senior bankers involved in credit disbursement say the pace of disbursement is picking up.