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Review of agricultural credit targets, disbursement

In line with the Government of Pakistan ’s priority for agriculture sector development, the Ministry of Finance released a report and recorded that the Agricultural Credit Advisory Committee (ACAC) set the indicative agricultural credit disbursement targets to Rs 1,250 billion for FY 2019 to 50 agriculture lending institutions counting 19 commercial banks, 2 specialized banks, 5 Islamic banks, 11 microfinance banks and 13 microfinance institutions/rural support Programs (MFIs/RSPs).

The statistics showed that this yearly indicative agriculture target is 28 percent higher than the last year’s disbursed amount of Rs 972.6 billion. Of the total target of Rs 1,250 billion, Rs 651 billion has been assigned to five major commercial banks, Rs 100 billion to ZTBL, Rs 245 billion to 14 Domestic Private banks and Rs 50 billion to five Islamic banks. For catering the needs of small farmers, Rs 13 billion has been assigned to PPCBL, Rs 156 billion to 11 Microfinance banks and Rs 35 billion to 13 MFIs/RSPs for FY 2019.

No doubt, Pakistan’s agriculture contributes 18.5 percent to country’s GDP and offers 38.5 percent employment to national labor force but it remains backward sector of the economy while high performing agriculture is a key to economic growth and poverty alleviation. The government officials also recorded that over the last decade, the performance of agriculture sector has declined short of desirable level, mostly due to stagnant productivity of all important crops. Cropped area of the five traditional crops has also largely remained equal.

Agricultural credit targets & disbursement (Rs billion)
Banks Target2018-19 2018-19 (July-March) 2017-18 (July-March) % Change over the Period
Disbursed Achieved (%) Target 2017-18 Disbursed Achieved (%)
5 Major Commercial Banks 651.0 450.0 69.1 516.0 353.6 68.5 27.3
ZTBL 100.0 45.1 45.1 125.0 62.8 50.2 -28.2
PPCBL 13.0 5.4 41.9 15.0 6.7 44.5 -18.4
DPBs (14) 245.0 143.2 58.5 200.0 124.9 62.4 14.7
Islamic Banks (5) 50.0 22.4 44.7 20.0 10.3 51.3 118.1
MFBs (11) 156.0 114.7 73.5 100.0 88.4 88.4 29.7
MFIs/RSPs 35.0 24.1 68.8 25.0 19.5 78.0 23.4
Total 1,250.0 804.9 64.4 1,001.0 666.2 66.6 20.8

Climate change also poses a serious challenge to Pakistan’s agriculture and threatens country’s water availability and food security. Statistics also showed that during July- March FY2019, the agriculture lending institutions have disbursed Rs. 805 billion which is 64.4 percent of the overall annual target of Rs. 1,250 billion and 20.8 percent higher than the disbursement of Rs. 666.2 billion made during same period of previous year. By end-March 2019, the outstanding portfolio of agriculture loans has risen by 15.5 percent, as against to the corresponding period last year. Further, the agriculture outreach in terms to outstanding borrowers has risen to 4.0 million from 3.72 million borrowers as of end June, 2018. Regardless of facing many issues such as volatility in agriculture produce prices, low yield and the impact of climatic change, the overall performance of financial sector remained consistent and recorded 20.8 percent growth in agricultural disbursement during the period under review. As a group, it is also recorded that five major banks disbursed Rs.450 billion, under specialized banks category, ZTBL disbursed Rs.45.1 billion against the target of Rs 100 billion while PPCBL disbursed Rs. 5.4 billion or 41.9 percent against its target of Rs. 13 billion during FY 2019. Fourteen domestic private banks collectively disbursed Rs.143.2 billion. Under microfinance category, microfinance banks disbursed Rs. 114.7 billion against their annual target of Rs.156 billion and MFIs/RSPs as group disbursed Rs. 24.1 billion against the target of Rs. 35.0 billion to small farmers. Further, under Islamic mode of financing, Islamic banks collectively disbursed Rs. 22.4 billion against their targets of Rs. 50.0 billion to agriculture borrowers, Islamic Windows of commercial banks disbursed Rs. 22.2 billion against their target of Rs. 50.0 billion during FY2019.


The government officials also registered that sector-wise classification shows that out of disbursements of Rs. 805 billion, Rs. 392.0 billion or 48.7 percent has been disbursed to farm-sector and Rs. 412.9 billion or 51.3 percent to non-farm sector during FY2019. Under farm sector, Rs. 128.1 billion or 32.7 percent has been disbursed to farmers of subsistence land holding while Rs. 263.9 billion or 67.3 percent disbursed to farmers of economic and above economic land holding. Similarly, under non-farm sector, Rs 118.8 billion or 28.8 percent disbursed to small farms and Rs 294.1 billion or 71.2 percent offered to large farms. During last couple of years, the focus of agriculture lending institutions has been shifting more towards non-farm activities because of new financing avenues and opportunities in livestock/dairy and poultry sectors.

SBP promotes agriculture financing

For promotion of agricultural financing, some of the major initiatives taken by SBP in collaboration with federal & provincial governments such as: Crop Loan Insurance Scheme, Livestock Loan Insurance Scheme, Government of Punjab E-Credit Scheme, Adoption of Automation of Land Record for Agriculture Financing, Implementation of Credit Guarantee Scheme for Small and Marginalized Farmers and Workshops/Trainings/Capacity & Awareness Building

Disbursement to farm & non-farm sector in Pakistan (Rs billion)
Sector 2018-19 (July-March) 2017-18 (July-March)
Disbursement % Share within sector Disbursement % Share within sector
A Farm Credit 392.0 48.7 315.6 47.4
1 Subsistence 128.1 32.7 130.4 41.3
2 Economic Holding 52.5 13.4 53.1 16.8
3 Above Economic Holding 211.4 53.9 132.0 41.8
B Non-Farm Credit 412.9 51.3 350.6 52.6
1 Small Farms 118.8 28.8 104.4 29.8
2 Large Farms 294.1 71.2 246.2 70.2
Total (A+B) 804.9 100 666.2 100

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