July 23 - 29, 20

Heavy borrowing of the government from banking sector has left a little space for the private sector to avail credit from the banks, however the banks are not only catering to the financial needs of the agriculture sector but their disbursement targets to farming sector were surpassed during fiscal year 2012.

There could be no second opinion that the agriculture sector is the backbone of Pakistan's economy and need to be looked after in all respects, hence the farming sector is being taken care of the banks under the government policy. It is however painful to see that despite all sort of facilities including agri loans at soft terms provided to the agriculture yet the highest number of non-performing loans or infected portfolio of the banking sector is related to agriculture. This situation calls for corrective measures to make agriculture sector free from political pulls and pressures with a focus to make it a real contributor to the economic growth, instead of a liability on the financial sector.

It is learnt that in the backdrop of growing size of non-performing loans in the farming sector, the private sector banks naturally reluctant to take risks of default. Under the prevailing situation there needs to evolve a mechanism of crop insurance related to recovery of bank loans.

The secured mechanism for repayment would be beneficial both for the banks as well as the farmers to have an easy access to bank financing.

Although the flood devastations cannot be ignored while looking at growing number of non-performing loans, yet the damages by floods and rains were not a regular feature but the defaults on the part of farmers seems to be routine matter may be because of political support and backing from the power corridors.

It is however good to know that the banks have surpassed the agriculture credit disbursement target for the last fiscal year (2011-12) by extending loans amounting to Rs 293.8 billion to agriculturists which is 8.8 billion (103 percent of annual target) more than the indicative target of Rs 285 billion set by the Agricultural Credit Advisory Committee (ACAC) for the whole fiscal year. It is 11.7 percent higher than Rs 263 billion disbursed in 2010-11.

Five large banks collectively disbursed agri. loans amounting to Rs 146.3 billion or 103.7% of their annual target (Rs 141 billion) in fiscal year 2011-12, higher by 4.3% as compared with Rs 140.3 billion disbursed during the preceding fiscal year (FY2010-11). National Bank of Pakistan (NBP), Habib Bank Limited (HBL), MCB Bank, Allied Bank Limited (ABL) & United Bank Limited (UBL) have surpassed their annual targets by achieving 106.0%, 103.5%, 103.3%, 102.8% and 100.7% disbursement respectively. Zarai Taraqiati Bank Limited (ZTBL) disbursed Rs 66.06 billion or 94.2% of its annual target of Rs 70.1 billion while Punjab Provincial Co-operative Bank Limited (PPCBL) by disbursing Rs 8.5 billion or 112.1% has surpassed its annual target (Rs 7.6 billion) during FY 2011-12.

Fourteen Domestic Private Banks as a group achieved 112.5% of their target (Rs 54.1 billion) by disbursing agri. loan of Rs 60.9 billion. The Bank of Khyber, Bank Al Habib, Faysal Bank, Soneri Bank, NIB Bank and Askari Bank have surpassed their annual agri. credit disbursement targets by achieving 174.6%, 147.6%,136.7%,132.4%,104.1% and 100.4 % disbursement respectively while other remaining banks could not meet their annual targets.

Five Microfinance Banks as a group disbursed agri. loans of Rs 12.1 billion or 99.3% of their annual target of Rs 12.2 billion during FY 2011-12. It may be pointed out here that the banks had been missing the agri. credit disbursement targets since 2008-09. Achievement of agri. credit disbursement target during the year ended June 2012 was extremely difficult in the backdrop of continuous declining trend in the overall Private Sector Credit and high agri. Non-performing Loans (NPLs) of major banks due to devastating floods of 2010 and heavy rains of 2011 in Sindh province. However, SBP adopted a multi-pronged strategy and made all out efforts in achieving the target of Rs 285 billion allocated by ACAC. The efforts of SBP officials not only helped banks in achieving their target but also surpassing it.

These efforts included swift settlement of crop loan insurance claims, close co-ordination with provincial revenue departments to facilitate the One Window Operation in agri. intensive districts for timely completion of revenue formalities, holding of farmers' awareness and financial literacy programs at grass root level, and follow up of targets with the top management of banks and their agri. Heads. The contribution by SBP BSC field offices in monitoring the regional targets was also greatly helpful.


Food is the first priority of the mankind which offers potentially enormous resources in agriculture to cater to the food requirement not only of the country but of the countries in the region. At the moment the oil rich Arab countries are confronted with food security problems and looking for investment in agriculture lands abroad.

On the other hand Pakistan's principal natural resources are arable land and water. The value of land cannot be over estimated that precious asset is available in Pakistan to turn the lot of the poor if properly organized, developed to optimize benefits of this natural gift. Foreign Investment in agriculture under certain parameters protecting national interest can turn around the rural economy in Pakistan

In Pakistan land About 25% of Pakistan's total land area is under cultivation and is watered by one of the largest irrigation systems in the world. Pakistan irrigates three times more acres than Russia. Agriculture accounts for about 21.2% of GDP and employs about 43% of the labor force. In Pakistan, the most agricultural province is Punjab and Sindh where wheat and cotton are the most grown. However rich lands with honey and milk are still awaiting for development both in Sindh, and Punjab.