KARACHI, Aug 16: The five top commercial banks have reported disappearance of more than 130,000 agricultural borrowers after defaulting on payment of their loans in last five years.

More than 106,000 borrowed money for kharif and 129,000 obtained loan for rabi crops. Assuming an overwhelming majority of these farmers are same for kharif and rabi, a rough estimate shows that 130,000 borrowers have disappeared.

Bankers are confident that a vast majority of the disappeared borrowers were the fictitious names used by the powerful local feudals. But they are helpless because of the pliant local district administration.

No wonder that during these five years, from 1997-98 to 2001-02, the five top banks reported entry of more than 350,000 fresh borrowers—almost three times of those who disappeared—in the fold of agricultural credit system. Banks reported about 308,000 new borrowers for rabi crop and 345,000 for kharif crop.

All these five top commercial banks—Allied Bank, Habib Bank, United Bank, Muslim Commercial Bank and National Bank— reported to State Bank of Pakistan a total outstanding credit amount of more than Rs13 billion at the end of last May.

Pakistan’s entire banking system show a total outstanding agricultural credit at more than Rs98 billion now. Of this, the Agricultural Development Bank of Pakistan is set to recover the highest amount of Rs82 billion outstanding loans.

The ADBP did not give number of the borrowers who had disappeared on default. But it did report total number of about 402,000 borrowers in 2002. These include 236,527 new borrowers and 165,186 old borrowers.

The third lending agency for agricultural credit is the Federal Cooperative Bank (FCB), which is now being wound up. For last many years the FCB’s lending was confined to Punjab only and its total outstanding loan amounts to more than Rs3.5 billion.

On persuasion of the State Bank, 13 private banks were made a part of the banking system to offer credit to the farmers. These banks were given a mandatory target of Rs2.5 billion. Eight banks did not respond at all and preferred to stay away from agricultural credit business.

The remaining five private commercial provided only 21 per cent of the Rs2.5 billion target.

The Agricultural Credit Advisory Committee (ACAC) of the State Bank of Pakistan discussed a proposal of asking the foreign banks to become a part of the agricultural credit system. It has to be put off after seeing the response of Pakistan’s private commercial banks.

Farmers say that a sizeable chunk of the outstanding agricultural loans pertain to non-agricultural activities. Loans obtained for purchase of tractors, equipments, construction of storages, silos, mechanised boats, and other agricultural development purposes should not be taken as agricultural credit.

There is also a demand for State Bank providing a line of lease credit for purchase of agricultural equipment and machinery which however is not finding a receptive ear. Farmers wants private micro credit banks and NGOs to be part of the agricultural credit system.

Private commercial banks have administrative limitations in offering agricultural credit particularly the farm loans which demand proper monitoring and follow up recovery drive.

While banks are used by the politically powerful feudals to get loans, the small farmers still depend on the local lender who charges exorbitantly high interest rates. Farmers allege that banks staff and local government officials also fleece the small farmers for providing loans.