Commercial and specialised banks have achieved 62.48 percent of agricultural credit disbursement target during the first nine months of current fiscal year. Year-on-Year (YoY) basis, the disbursement during the period posted an increase of 1.41 percent against the same period of last fiscal year.
Sources in banking sector told Business Recorder on Wednesday that some improvement has been witnessed in the agricultural credit disbursement, however the disbursement is far than the annual target of Rs 270 billion for the current fiscal year. They said slow growth in the disbursements is largely due to massive decline seen in one of the leading specialised banks - Zarai Taraqiati Bank Ltd (ZBTL).
The bank posted a decline of 24 percent in credit disbursement during July-March of current fiscal year against 9.5 percent rise in disbursement by five leading commercial banks and some 17 percent surge by domestic private banks. They said flash floods across the country in August last year had seriously affected the agricultural activities in three provinces - Punjab, Sindh and Khyber Pakhtunkhwa - resulting in decline of the credit disbursement by the ZBTL.
Detailed analysis reveal that the decline in agricultural credit to the farm sector was stronger in the case of subsistence (small) farms, they said and added that this is due to both demand and supply factors. The high and rising prices of agri products have resulted in improved cash flows for small farmers with the result they reduced their demand for bank credit; while on the supply-side, commercial banks remain risk averse in the face of rising NPLs.
Looking forward, they said agri credit could improve in coming months due to expected increase in fertiliser offtake for wheat, and early sowing of Kharif crops - as farmers are optimistic due to high prices, particularly for cotton. The State Bank of Pakistan's latest statistics revealed that in absolute terms, disbursement of credit to the agriculture sector surged by Rs 2.353 billion to Rs 168.687 billion in July-March of FY11 as compared to total disbursement of Rs 166.334 billion in the same period of last fiscal year. Total disbursement during the period under review is some 62.48 percent of indicative target of Rs 270 billion set by the State Bank of Pakistan for FY11.
Sharp decline in agricultural credit disbursement has been registered by ZBTL and United Bank Limited, while agricultural credit disbursement by other commercial and specialised banks, including four leading commercial banks - Punjab Provincial Co-operative Bank Limited and eight domestic private banks, have posted upward trend.
Overall credit disbursement by five major commercial banks - Allied Bank Ltd (ABL), Habib Bank Ltd (HBL), MCB Bank Ltd, National Bank of Pakistan (NBP) and United Bank Ltd (UBL) registered an increase of 9.50 percent during July-March of current fiscal year.
The disbursement by five major commercial banks stood at Rs 93.267 billion in first nine months of FY11 as compared to Rs 85.177 billion in the same period of last year, depicting an increase of Rs 8.7 billion. During the period, Allied Bank Ltd performed well as it disbursed Rs 12.76 billion (up by 12.50 percent). With this disbursement, ABL has also achieved almost 79.75 percent of its indicative target of Rs 16 billion for the current fiscal year.
With an increase of 18.40 percent, Habib Bank Ltd disbursed Rs 22.078 billion and achieved 72.39 percent of its target, MCB Bank achieved 63.30 percent target with disbursement of Rs 16.426 billion after a slight decline of 0.02 percent. National Bank of Pakistan's disbursement stood at Rs 30.829 billion (up by 16.21 percent) and agricultural credit disbursement by United Bank Ltd declined by 8.62 percent to Rs 11.171 billion.
Agri credit disbursement by Zarai Taraqiati Bank Ltd, the largest specialised bank, has posted a decline of 23.71 percent during the period. Disbursement by ZBTL stood at Rs 37.371 billion during July-March 2011 as compared to Rs 48.98 billion in corresponding period of last fiscal year, depicting a decrease of Rs 11.61 billion. The ZBTL has achieved only 45.69 percent of its indicative target of Rs 81.8 billion.
Agri credit disbursement by Punjab Provincial Co-operative Bank Ltd (PPCBL) and 14 private commercial banks surged by 24.47 percent and 17.50 percent, respectively. PPCBL has achieved 64.14 percent of its target as its disbursement stood at Rs 4.393 billion in first nine months of the current fiscal year compared to Rs 3.53billion in the same period of last fiscal year.
In addition, 14 domestic private banks disbursed a combined Rs 33.65 billion in July-March of current fiscal year against disbursement of Rs 28.64 billion in same period of last fiscal year, depicting a surge of Rs 5 billion. The domestic private banks have achieved 68.82 percent target of Rs 48.9 billion.