Agriculture sector's: NPLs surge to Rs 34.6 billion in first quarter fiscal year 2012

Non-Performing Loans (NPLs) of the agricultural sector surged to Rs 34.6 billion in first quarter of the current fiscal year ended on September 30, 2011, mainly due to what sources say flood and high interest rate.
Sources in banking industry told Business Recorder on Wednesday that while, the State Bank of Pakistan (SBP) was enhancing the agricultural credit disbursement target for the current fiscal year, the NPLs of agricultural sector had also shown some increase, due to floods in two major agricultural provinces of the country in August last year. The floods destroyed standing crops on large area and the affected growers could not pay off their already obtained loans.
Sources blamed number of factors for the rise in NPLs and default in repayment, like floods in Sindh, high mark-up and volatile law and order situation. High markup rates, good prices of wheat and cotton in areas not affected by floods and improving cash flow of the farmers were the factors hampering the growth of agricultural credit disbursement, they maintained.
Year on Year (YoY) basis, an increase of 14 percent was witnessed in the NPLs of agricultural sector in the end of September 2011 compared. The NPLs mounted to Rs 34.6 billion or 17.6 percent of the total outstanding loans as on September 30, 2011 compared with Rs 30.3 billion or 19 percent of the outstanding loans as on September 30, 2010. The outstanding loans stood at Rs 182.3 billion in September 2011 compared with Rs 172.1 billion in the same period last year.
Zarai Taraqiyati Bank Limited (ZTBL), which is the leading lender of agricultural sector, is also a major contributor in the NPLs, as with Rs 90.1 billion outstanding loans, the NPLs of ZTBL reached Rs 19.1 billion in September 2011 compared against Rs 15.2 billion in September 2010.
During the period under review, five big banks including National Bank of Pakistan, Habib Bank Limited, MCB Bank, Allied Bank Limited and United Bank Limited had NPLs of Rs 8.4 billion with Rs 61.4 billion outstanding loans.
In addition, NPLs of some 14 Domestic Private Banks (DPBs) stood at Rs 4.1 billion with 23.2 billion of outstanding loans and NPLs of Punjab Provincial Co-operative Bank Limited (PPCBL) stood at Rs 2.2 billion.
The number of agricultural loan borrowers was 2.32 million including the borrowers of Microfinance Banks in first quarter of the current fiscal year against 1.85 million in September 2010. A decrease in number of borrowers was witnessed especially by five leading banks, while number of borrowers of PPCBL showed a modest improvement of 4.8 percent during the period under review.
It may be mentioned here that an indicative agricultural credit disbursement target of Rs 285 billion has been proposed by SBP for fiscal year 2011-2012.