Feb 27 - Mar 4, 20

National Bank of Pakistan is among top 'five' banks of Pakistan. While it offers complete range of commercial banking services, one of the key areas of it is lending to farmers. For the financial year 2011-12, the State Bank of Pakistan (SBP) has fixed a lending target of Rs280 billion and NBP has been assigned the maximum share as it is a specialized institution created to cater the needs of farmers.

NBP takes pride in having disbursed even more than the target assigned last year and aims at offering even better services to the farmers due to its greater outreach. This becomes possible only because NBP's 875 branches out of total 1271 domestic branches are involved in catering to the needs of farmers.

The other feature distinguishing NBP is its very competitive markup rate, lower than the rate being charged by other financial institutions. The loans disbursed can be divided into two categories: production and development loans.

Under the first category loans are disbursed mainly for the procurement of seeds, leveling land, pesticides etc. and fertilizers and the second category is for the purchase of agricultural tractors and implements and construction of modern storage, cattle farms, poultry farms etc. facilities. Under the dynamic leadership of its President Qamar Hussain, the bank's claim that it delivers loans at the doorstep of farmers is evident from disbursement of approximately Rs42.4 billion among nearly 252,000 farmers, against a target of Rs41 billion. NBP takes pride in being a key partner in government's program of achieving food security and poverty alleviation.


In Pakistan, agricultural credit market consists of formal and informal providers of credit. Formal lenders are specialized banks like Zarai Taraqiati Bank Ltd. (ZTBL) and Punjab Provincial Cooperative Bank Ltd. (PPCBL) and commercial banks, while the latter comprises of illegal money lenders, friends and relatives, village shopkeepers and commission agents, etc.

The predominant share of credit is provided by the informal sources of credit in the country. In order to overcome this inadequacy, two specialized institutions i.e. Agricultural Development Finance Corporation and the Agricultural Bank were established in 1950s.

Subsequently, these institutions were merged to form the Agricultural Development Bank of Pakistan (ADBP) in 1961 (Now called ZTBL). Prior to 1972, commercial banks' loans portfolio in agriculture was nominal and bulk of the credit to this sector was provided by ADBP. With the introduction of banking reforms in 1972, several institutional and policy changes were made with the objective of a more equitable distribution of banks' credit among various sectors and groups. Towards the end of 1972, SBP started assigning mandatory agricultural credit targets to five big banks viz. ABL, HBL, MCB, NBP, and UBL with provision for penalizing institutions that do not meet the targets .

The legislation on Co-operative Credit System was introduced in the subcontinent in 1904. At the time of independence, co-operative banks were mainly engaged in financing commercial activities and neglected the financing to co-operative societies. In 1976, with enactment of Co-operative Banking Ordinance, the Federal Bank for Co-operatives (FBC) was established to finance provincial cooperative banks for further lending to cooperative societies. Subsequently, provincial cooperative banks were amalgamated to provide agricultural credit at grass root level and encourage the cooperative societies' structure in the country. However, the system did not achieve its goals due to default of the provincial cooperative banks and a number of fake cooperative societies. Various steps undertaken by the government over subsequent years failed to revive the role of cooperatives in financing the agriculture sector. Resultantly, FBC was liquidated in 2001 followed by liquidation of provincial cooperative banks' except PPCBL. After liquation of FBC, financing to PPCBL was diverted to SBP under the guarantee of Punjab Government.

Informal credit market is characterized by low transaction costs, very high interest rates, and rapid disbursement of credit. Although, its share in total credit has declined, it is still a major source of agri. credit in the country. The close familiarity of borrowers with informal lenders in conjunction with coercive loan recovery methods and the inability of formal institutions to reach to the poor have brought about heavy dependency of the rural population on the informal markets. This trend has continued despite higher interest rates ranging from yearly rates of 50 to 100 per cent. Most informal lenders have limited loan portfolios and operate within the narrow area of their influence.


National Bank of the Pakistan realizes the vital role of agriculture in the development of the country and developed various farmer-friendly schemes, in line with the policies of the State Bank of Pakistan and delivering it at the farmers' doorstep or within their easy access through simplification of documents, less stringent eligibility criteria etc. Being a public sector organization, National Bank of Pakistan has been at the forefront and has always demonstrated its unflinching commitment to the progress of the country. NBP out of its 1271 domestic branches designated 875 branches for the Agriculture Finance.

The Bank has specialized field force of agriculture graduates (Agriculture Field Officers) who are supposed to spend a considerable part of their time in the field area under their jurisdiction especially during sowing and harvesting seasons to provide technical support to the farmer for adoption of improved farming practices, use of better yielding inputs pesticides etc. and facilitate them to meet their financing needs.


Agriculture sector is divided into farm sector and non-farm sector. Different activities have been identified within these two sectors which are categorized as production and development activities. NBP has devised comprehensive list of items covering almost all the activities ranging from input to farm development along the value added chain from production up to the processing.

Farm Production Finance: Production finance is meant for crop production. It is a finance facility, which is given mainly for meeting input needs of a particular crop. These loans are mainly for the purchase of agriculture inputs like seeds, fertilizers, pesticides, etc. and other short-term requirements. Farm Development Loan: It is a financing facility to carry out development work on and off the farm and includes financing for the purchase of tractor, tube wells, farm machinery, land improvement, etc. The bank has developed various products for facilitating farmers to meet such developmental expenses.


The financing to nonfarm sector deals in financing for livestock, dairy, poultry, fisheries, orchards and forestry. Term loans are offered for the purchase of animals, equipment and machinery etc. whereas working capital finance is offered to meet running expenses of the business.

NBP is offering vide range of agriculture financing schemes to fulfill various credit requirements of the financing scheme, as these finances are extended against personal security or lien on agri pass book or mortgage of rural/urban/commercial/residential property or pledge of ssc or dsc/lien on bank deposits etc.


NBP has not only surpassed SBP's target by disbursing Rs42.388 billion to 251732 customers/borrowers against target of Rs41 billion for financial year ended on 30-06-2011, but also marinated agriculture finance portfolio of Rs30.448 billion with 238926 customers/borrowers.