AGRI CREDIT FACES DOWNWARD TREND

KANWAL SALEEM
(feedback@pgeconomist.com)
Jan 3 - 9, 20
11

Leading commercial and specialised banks of the country have registered downward trend in credit disbursement to the agriculture sector during the period from July to November of fiscal year 2010-11.

Agricultural credit disbursement by five major commercial banks i.e. Allied Bank Limited, Habib Bank Limited, MCB Bank Limited, National Bank of Pakistan and United Bank Limited stood at Rs43.054 billion in July-Nov 2010 compared with Rs44.935 billion in the same period of last, depicting a decrease of Rs1.881 billion.

According to experts of banking industry, flood across the country has badly affected operation of banking industry in rural areas, resulting decline in agricultural credit disbursement. They said presently growers in the flood affected areas are engaged in reconstruction of their homes and they are expected to get loan from January 2011.

Overall credit disbursement by these banks has registered a decline of 4.19 per cent during the first five months of current fiscal year. During the period, Allied Bank Limited has disbursed Rs6.88 billion (up by 6.17 per cent), Habib Bank Limited Rs10.753 billion (surge by 5.39 per cent), MCB Bank Limited Rs6.852 billion (down by 27 per cent), National Bank of Pakistan Rs14.577 billion (up by 4 per cent) and agricultural credit disbursement by United Bank Limited stood at Rs3.99 billion (decrease by 18.16 per cent).

Commercial and specialised banks have achieved 27 per cent target of agricultural credit disbursement during first five months of current fiscal year 2010-11. However, year on year basis the disbursement during the period has posted a decline of 10 per cent.

In absolute terms, disbursement of credit to the agriculture sector decreased by Rs7.95 billion to Rs73.157 billion in July-Nov, 2010 when compared with total disbursement of Rs80.952 billion in the same period last year. Total disbursement during July-Nov 2010 is some 27.10 per cent of indicative target of Rs270 billion set by the State Bank of Pakistan for FY11. It is some 9.63 percent YoY or Rs7.795 billion less than the same period of last fiscal year.

Zarai Taraqiati Bank Limited, the largest specialised bank, has posted a decline of 42.29 per cent during the July-Nov 2010, as it has disbursed a total of Rs12.594 billion in the first five months when compared with Rs21.823 billion disbursement in the same period last year. The credit disbursement by Punjab Provincial Co-operative Bank Limited (PPCBL) and 14 private commercial banks has surged by 70 per cent and 20.34 per cent respectively.

Agricultural credit disbursement by PPCBL stood at Rs1.470 billion in July-Nov, 2010 compared with Rs865 million in corresponding period of last year. Besides, 14 domestic private banks also loaned a combined Rs16.037 billion in first five months of current fiscal year as against disbursement of Rs13.326 billion in the same period of last fiscal year, depicting a surge of Rs2.711 billion. It may be recalled that recently for current fiscal year the State Bank of Pakistan has enhanced agricultural credit disbursement target by Rs10 billion to Rs2270 billion.