KARACHI, Dec 7: An impressive increase of 26 per cent has been noted in the disbursement of agriculture credit during the first quarter of this fiscal over disbursements made in the corresponding year-ago period, but farm loan recoveries continue to remain dismal and are down by almost 9 per cent.

The State Bank of Pakistan report for the first quarter (July to September 01-02) released on Friday indicates Rs11.30 billion as having been disbursed among the farmers. In the same period of 00-01, the banks offered Rs8.97 billion loans.

The report hopes for further improvement in credit portfolio in the second quarter (Oct-Dec) since both the harvesting of kharif crops and sowing of rabi crops are concentrated during this period.

Bankers and agriculturists attribute this rise in loan disbursement to a number of factors. First is the decision taken by the SBP Committee on agriculture this March to increase the indicative cost per acre for all major crops. Bankers say that there is now also a greater credit demand for construction of storages and to finance ancillary activities of the agriculture.

The SBP report reveals an increase of 9.6 per cent in disbursement of loans by the Agricultural Development Bank of Pakistan. The ADBP offered Rs6.56 billion in the just-ended quarter as against Rs5.98 billion disbursed in the same period of 00-01.

A more than 60 per cent increase in farm loans was made by the five commercial banks. These banks provided Rs3.85 billion loans to the farmers as against Rs2.40 billion given during the last fiscal.

Bankers say that the ADBP has not been able to obtain line of credits from the commercial banks. The commercial banks have preferred to provide loans for the ancillary activities of agriculture.

The Federal Bank of Cooperatives now offers loan only in Punjab and the NWFP. It has disbursed Rs900 million loans against Rs585.5 million given in the corresponding period of last fiscal.

The ADBP and the commercial banks maintained a rising trend in their loan recovery drive but the FBC lagged behind by almost 56 per cent, indicating that the cooperatives in Punjab and the NWFP are hard pressed.

The SBP report informs that ADBP recovered Rs3.72 billion which is 5.5 per cent more than recoveries made in the same period of last fiscal. Commercial banks showed an improvement of more than 14 per cent in loan recoveries and mopped up over Rs2 billion. The FBC however managed to recover only Rs869 million as against Rs1.96 billion recovered during the last fiscal.