KARACHI, Nov 22: All the banks involved in disbursement of mandatory agricultural credit lent Rs26.9 billion to the farming community in the first four months of this fiscal year. They are supposed to disburse at least Rs85 billion during the year.

Five major commercial banks namely National Bank, Habib Bank, United Bank, Muslim Commercial Bank and Allied Bank lent Rs14.33 billion to the agricultural sector in July-October 2004. They are supposed to lend Rs38 billion to this sector during this fiscal year. Thus they achieved about 38 per cent of their total target.

Among them, the state-run NBP made the largest lending of Rs5.32 billion in four months to October, against its full year target of Rs15 billion. HBL made the second largest lending of Rs4.5 billion during this period, against its full year target of Rs10 billion.

MCB and UBL lent Rs1.77 billion and Rs1.54 billion respectively in four months to October, against their annual target of Rs5 billion each. ABL lent Rs1.2 billion during this period against its full year target of Rs3 billion.

Whereas major commercial banks seem to be on track in achieving their combined farm credit target during this fiscal year, the largest agricultural lender Zarai Taraqiati (Agricultural Development) Bank might miss its target of Rs34 billion.

Sources close to the SBP say ZTBL disbursed Rs8.06 billion in the first four months of this fiscal year against its full year target of Rs34 billion. What made it difficult for ZTBL to lend more generously was that it was making new farm loans only after recovering the old ones. It was instructed by the SBP to do so to reduce the volumes of its unpaid loans.

The sources say that Punjab Provincial Cooperative Bank (PPCB) lent Rs2 billion to the farming community in four months to October against its full fiscal year target of Rs8 billion. They say that 14 local private banks also made Rs2.53 billion farm loans during this period against their combined full year target of Rs5 billion.

These 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.

All five major commercial banks, ZTBL, PPCB and fourteen private banks involved in disbursement of mandatory agricultural credit charge up to 9 per cent mark-up on all farm loans. They give these loans both for growing crops as well as for purchasing agricultural machinery and implements.

That farm lending needs to be accelerated can be gauged from the fact that Rs26.9 billion lending made in July-October this year is less than 22 per cent of the total private sector credit of Rs123.5 billion disbursed during this period.

The SBP has set a tentative target of Rs200 billion for private sector credit disbursement during this fiscal year. Bankers say the pace with which the private sector credit has grown in the first four months suggests that they would end up lending Rs350 billion-Rs400 billion during the entire fiscal year.

On the other hand, the pace of growth of farm credit is so low that even meeting the Rs85 billion target seems too difficult. But senior officials of commercial banks say they expect to accelerate their farm lending in the months to come adding that not only the five major commercial banks, but the smaller 14 banks would also achieve their credit disbursement targets.

They say that ZTBL and PPCB may miss their targets, the former because of the condition that it has to lend afresh against recoveries and the later due to its inability to reach the maximum number of borrowers.